Look at this producer surplus graph. Suppose that Herb is a wheat farmer who grows only a small crop because he cannot make much profit at P1. When the price moves to P2, what is Herb most likely to do?
a. Begin planting an even smaller crop.
b. Begin planting a larger crop.
c. Quit growing wheat completely.
d. Wait to sell his wheat until the price returns to P1.
b. Begin planting a larger crop.
You might also like to view...
Refer to Figure 17-2. At which point are inflation expectations equal to the actual inflation rate?
A) A B) B C) C D) all of the above
Adverse selection exists when
A. the parties on one side of the market, who have information not known to others, self select in a way that benefits the parties on the other side of the market. B. the parties on one side of a market charge more for something than the parties on the other side of the market want to pay. C. one party to a transaction changes his or her behavior in a way that is hidden from and costly to the other party. D. the parties on one side of the market, who have information not known to others, self select in a way that adversely affects the parties on the other side of the market. E. none of the above
According to Figure 6.1, in postwar U.S history ________
A) productivity growth was always exceeded by labor growth B) labor growth has always exceeded capital growth C) productivity growth has always exceeded capital growth D) output growth has always exceeded productivity growth
Under U.S. antitrust law, a consent decree allows a firm to
a. admit to an antitrust violation without penalty b. admit to an antitrust violation without a lawsuit c. challenge the government's accusation in court d. cease the alleged wrongdoing without admitting guilt e. cease the alleged wrongdoing only by admitting guilt