Exhibit 7-13 Price and cost per unit curves
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In Exhibit 7-13, the firm will not produce when the price is between:
A. zero and P2.
B. P2 and P3.
C. P3 and P4.
D. P4 and P5.
Answer: A
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A) surplus; rise B) surplus; fall C) shortage; fall D) neither a shortage nor surplus; not change
If a good is an inferior good, then its
A) demand curve will be upward sloping. B) income effect reinforces the substitution effect. C) income elasticity is negative. D) Engel curve cannot be drawn.
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Last week, Gina's bakery sold fewer cupcakes than ever before. Regression to the mean implies that the bakery:
A. has probably had other bad weeks, but Gina can't remember them. B. will sell more cupcakes this week. C. should stop selling cupcakes. D. is likely to go out of business.