Which of the following is a difference between a binding and a not binding price floor?
a. A binding price floor causes a surplus in the market, while a not binding price floor causes a shortage in the market.
b. A binding price floor causes a surplus in the market, while a not binding price floor has no impact on the market forces.
c. A binding price floor causes a shortage in the market, while a not binding price floor has no impact on the market forces.
d. A binding price floor causes a shortage in the market, while a not binding price floor causes a surplus in the market.
b
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Suppose Jason owns a small pastry shop. Jason wants to maximize his profit, and thinking back to the microeconomics class he took in college, he decides he needs to produce a quantity of pastries which will minimize his average total cost
Will Jason's strategy necessarily maximize profits for his pastry shop? A) No; In order to maximize profit, Jason would never want to produce the quantity where average total cost is minimized. B) Yes; Since Jason's pastry shop is in a perfectly competitive market, the only way to maximize profit is to produce the quantity where average total cost is minimized. C) Not necessarily; Depending on demand, Jason may maximize profit by producing a quantity other than that where average total cost is at a minimum. D) Not necessarily; This strategy will only maximize Jason's profit in the long run, but not in the short run.
If the demand for the Ford Mustang increases, we would expect Ford to
A) keep the price of Mustangs constant, regardless of the cost or benefit of a price change. B) increase the price of Mustangs to keep pace with the increase in demand. C) increase the price of Mustangs only if the benefit of a price increase outweighs the cost. D) decrease the price of Mustangs to maintain the increase in demand.
A downtown diner daily serving the same business people will be more likely to serve a tasty lunch than a snack bar at a tourist attraction
What will be an ideal response?
Assume Robbie's Robots operates in a perfectly competitive market producing 3,000 robots per day. At this output level, the selling price is $800 per robot and the marginal cost is $625 per robot. It follows that producing one more robot will cause this firm's
A. profits to decrease. B. profits to remain unchanged. C. total cost to decrease. D. profits to increase.