The price of chocolate chips has increased. For the producers of chocolate chip cookies, this means:
A. they can supply more at each price because the price of a main input has gone up.
B. they can supply more at each price because of more competition.
C. they can supply less at each price because the price of a main input has gone up.
D. they can supply more at each price because some of the competition will drop out.
Answer: C
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Answer the following statement(s) true (T) or false (F)
1. An efficiency wage is the wage that maximizes the surplus of the worker. 2. Stockholders can use high levels of compensation and substantial severance payments to get their corporate executives to take on higher levels of risk. 3. A golden parachute is a mechanism that stockholders employ to encourage executives to be more risky than they would be without the parachute. 4. Stock options create the wrong incentive in that they create a principal-agent problem. 5. An unexpected increase in inflation, by diluting the informational content of prices, will lead to an increase in unemployment.
A country can benefit by indulging in international trade when:
a. it produces a good in which it has absolute disadvantage. b. it produces a good in which its trading partner has an absolute advantage. c. it produces a good in which it has comparative advantage. d. it produces all the goods which are supported by its resources. e. it produces nothing and merely depends on foreign imports.
Suppose that demand is inelastic within a certain price range. For that price range,
a. an increase in price would increase total revenue because the decrease in quantity demanded is proportionately less than the increase in price. b. an increase in price would decrease total revenue because the decrease in quantity demanded is proportionately greater than the increase in price. c. a decrease in price would increase total revenue because the increase in quantity demanded is proportionately smaller than the decrease in price. d. a decrease in price would not affect total revenue.
What causes an increase in demand for land?
a. a decrease in both the supply and the quantity b. a combination of increased supply and low price c. derived demand for a product it is used to produce d. increased rents bringing more land onto the market