If the supply curve for orange juice is estimated to be Q = 40 + 2p, then, at a price of $2, the price elasticity of supply is
A) .01.
B) .09.
C) 1.
D) 11.
B
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If the production of wheat were subsidized by government,
A) the demand for wheat would increase. B) the supply of wheat would increase. C) both A & B would occur. D) none of the above would occur.
The principal-agent problem is the issue of inducing
A) agents and principals to work hard. B) principals to act in the best interests of agents. C) agents to act in the best interests of principals. D) None of the above answers is correct.
If an average cost pricing rule is imposed on the firm in the figure above, the price will be
A) $5 per unit. B) $25 per unit. C) $15 per unit. D) $20 per unit.
The trade-creation effect refers to:
a. a reduction in economic efficiency as a result of a preferential trade agreement. b. a production shift to a higher-cost producer as a result of a preferential trade agreement. c. the outcome of a preferential trade agreement that allows a country to obtain goods at a lower cost than is available at home. d. diversion of production from a country that has comparative advantage. e. a production shift to a country that does not have comparative advantage.