Suppose the cost of insecticide (a variable input) decreases for broccoli farmers. In order to maximize profits, ceteris paribus, broccoli farmers should
A. Increase output.
B. Keep output the same since the market price did not change.
C. Increase prices.
D. Decrease output.
Answer: A
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Use the following graph for a competitive market to answer the question below.
A price floor of $10 per unit will result in a
A. shortage of 200 units. B. surplus of 200 units. C. 50 units being traded. D. No shortage or surplus
What is the difference between the monetary approach to the exchange rate and monetary approach to the balance of payments? Briefly summarize the policy implications of the monetary approach
What will be an ideal response?
In a finitely repeated prisoners' dilemma game
A) firms will only cooperate if they each adopt a tit-for-tat strategy. B) firms cooperate and achieve the collusive Nash equilibrium for all rounds. C) firms cooperate for most of the rounds, but switch to the non-cooperative outcome in the final couple of rounds. D) firms do not cooperate and the static game Nash equilibrium is the outcome for each round.
The purpose of an effluent fee imposed on a firm is
A) to increase output of its product by increasing the resources allocated to production. B) to increase output of its product by reducing the resources allocated to production. C) to reduce output by increasing production costs thereby reducing resources used. D) none of the above