Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases
A) the demand for salsa decreases. B) the supply of salsa decreases.
C) the demand for salsa increases. D) the demand for tortilla chips decreases.
C
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The opportunity cost of a one-unit increase in an activity
A) is greater than the marginal benefit. B) is called rational cost. C) decreases as you do more of it. D) is called marginal cost. E) is measured by what the person is willing to give up to get one more unit of the activity.
Regulated natural monopolies can obey a marginal cost pricing rule and still make a normal profit by engaging in
A) least cost pricing and average cost pricing. B) price discrimination and two-part tariff pricing. C) zero profit pricing. D) profit-maximizing pricing. E) None of the above answers is correct because a natural monopoly regulated using a marginal cost pricing rule always incurs an economic loss.
Suppose the MPC is .6 and consumption increases by $6 billion. Consequently, total income through the multiplier effect will:
a. Increase by $12 billion b. Decrease by $15 billion c. Increase by $15 billion d. Increase by $10 billion
?Hair Pins /hourBandanas /hourNigel410Mia93
Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 3.3. Nigel's opportunity cost of producing one hair pin is:
A. 1/3 of a bandana. B. 2.5 bandanas. C. 3 bandanas. D. 10 bandanas.