Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 40 units of clothing but no food. Suppose each has the utility function U = F1/2C1/2

If the price of clothing is always $1, and the food price is currently $3, then we can conclude A) the market is at a competitive equilibrium.
B) the price of food will drop towards a competitive equilibrium.
C) the price of food will increase towards a competitive equilibrium.
D) None of the above.


C

Economics

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A. a firm's technology is slow to change. B. firms always have the option of substituting capital for labor. C. the firm's output price falls when the firm produces more output. D. a firm is less willing to pay higher labor costs if it is easy for the firm to substitute capital for labor. E. workers supply more labor when their wage increases.

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Because pollution taxes raise production costs, the ________ curve ________.

A. supply; shifts to the right B. supply; shifts to the left C. supply; does not change D. demand; shifts to the right

Economics

Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.

A. D; C B. D; B C. A; B D. B; C

Economics