The demand for a good would be more price inelastic
a. the shorter the time the consumer has to adjust to price changes
b. the higher the price of the good
c. the more the number of good substitutes
d. the less essential the nature of the good
e. if the supply is more price elastic
A
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The annual insurance premiums for Michael’s Machine Shop have permanently risen because of a recent series of thefts by employees, but there is no change in the premiums paid by Michael's competitors. If machine shops are a competitive constant-cost industry, then in the long run
a. Michael's profit will fall to zero. b. Michael's Machine Shop will be driven out of business. c. the higher fixed costs will have no effect on Michael's pricing and production decisions. d. the demand for service from Michael’s Machine Shop will fall.
If house purchases and renting an apartment are substitutes, then an increase in the price of a new house results in a rise in the rent charged for apartments
Indicate whether the statement is true or false
Farmer Jones bought his farm for $75,000 in 1975. Today the farm is worth $500,000, and the interest rate is 10 percent
ABC Corporation has offered to buy the farm today for $500,000 and XYZ Corporation has offered to buy the farm for $530,000 one year from now. Farmer Jones could earn net profit of $15,000 (over and above all of his expenses) if he farms the land this year. What should he do? A) Sell to ABC Corporation. B) Farm the land for another year and sell to XYZ Corporation. C) Accept either offer as they are equivalent. D) Reject both offers.
Regarding the relationship between marginal profit and average profit, which of the following statements is NOT true?
A. If the average profit is rising, the marginal profit figure must be rising. B. If marginal profit is lower than average profit, then average profit must decrease when profit increases. C. If marginal profit is below average profit, the average profit decreases. D. All of these statements are true.