Coca-Cola bottlers increased their prices as the price of sugar (an important ingredient in producing Coke) rose sharply in the late 1980s. Under these circumstances, the increase in the price of Coke occurs as a result of a(n):
a. decrease in supply.
b. decrease in demand.
c. increase in supply
d. increase in demand.
a
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Large countries can improve their welfare by levying a tariff only if it does not
A) encourage rent seeking elsewhere in the economy. B) discourage innovation. C) lead to retaliation by the nation's trading partners. D) All of the above. E) None of the above.
Which concept springs to mind when thinking of the classical model?
a. Inflation. b. Population growth. c. Markets clear. d. The microeconomy. e. Money supply.
An investment carrying a current cost of $120,000 is going to generate $50,000 of revenue for each of the next three years. To calculate the internal rate of return we need to:
A. find the interest rate at which the present value of $150,000 for three years from now equals $120,000. B. find the interest rate at which the sum of the present values of $50,000 for each of the next three years equals $120,000. C. calculate the present value of each of the $50,000 payments and multiply these and set this equal to $120,000. D. subtract $120,000 from $150,000 and set this difference equal to the interest rate.
If a profit maximizing firm is currently producing where MR = MC, it should
A) increase output so that marginal revenue is less than marginal cost. B) decrease output so that marginal revenue will be greater than marginal cost and the firm's profit will increase. C) not change because it is already maximizing profit. D) exit the industry.