Suppose that a more efficient way to produce a good is discovered, thus lowering production costs for the good. This will cause a(n):
A. Increase in supply
B. Decrease in supply
C. Increase in quantity supplied
D. Decrease in quantity supplied
Answer: A
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In order to isolate the substitution effect of a price increase, a consumer
a. must be given a lower price on the other good so that he can achieve his original indifference curve. b. must be given enough of the other good so that his consumption of that good is not influenced. c. must be given enough additional income to allow him to achieve his original indifference curve. d. must be given enough additional income to allow him to purchase the original quantity of the good.
Suppose the daily demand for Coke and Pepsi in a small city are given by QC = 90 - 100PC + 400(PP - PC) and QP = 90 - 100PP + 400(PC - PP), where QC and QP are the number of cans Coke and Pepsi sell, respectively, in thousands per day. PC and PP are the prices of a can of Coke and Pepsi, respectively, measured in dollars. The marginal cost is $0.45 per can for both Coke and Pepsi. If PC = $0.60, what is Pepsi's demand function?
A. QP = 90 - 500PP B. QP = 330 - 400PP C. QP = 500 - 330PP D. QP = 330 - 500PP
Someone who has just inherited a "goldmine" has received a great deal of ________
A) wealth B) money C) income D) currency E) liquidity
General equilibrium analysis:
A. is the study of competitive equilibrium in many markets. B. illustrates the dependence among markets. C. concerns competitive equilibrium in a single market, considered in isolation. D. was pioneered by Nobel laureate Vernon Smith.