Milk can be used to produce cheese or butter. If the price of a pound of butter rises, what happens to the supply of cheese?
A) The supply of cheese decreases.
B) The supply of cheese increases.
C) The supply of cheese stays the same and there is a decrease in the quantity supplied of cheese.
D) The supply of cheese stays the same and there is no change in the quantity supplied of cheese.
E) The supply of cheese could increase, decrease, or stay the same depending on what happens to the supply of butter.
A
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Use the following graph to answer the next question.
In the diagram, Qf is the full-employment output. A contractionary fiscal policy would be most appropriate if the economy's present aggregate demand curve were at
A. AD0. B. AD1. C. AD2. D. AD3.
When a demand curve is perfectly elastic:
A) marginal revenue = average revenue = price. B) marginal revenue > average revenue = price. C) marginal revenue < average revenue = price. D) marginal revenue > average revenue > price.
Other things being equal, an increase in the price of a good leads to an increase in the amount produced. This is known as
A) the law of demand. B) the law of supply. C) ceteris paribus. D) equilibrium.
The story of innovation battles among firms is analogous to the story of armaments races among countries
a. True b. False Indicate whether the statement is true or false