Kiwis and strawberries are substitutes for consumers. An increase in the price of a kiwi coupled with an increase in the number of strawberry growers ________ the equilibrium price of a pound of strawberries and ________ the equilibrium quantity of
strawberries.
A) raises; increases
B) lowers; probably changes, but more information is needed to determine if it increases or decreases
C) lowers; increases
D) probably changes, but more information is needed to determine if it rises or falls; increases
E) raises; probably changes, but more information is needed to determine if it increases or decreases
D
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Figure 10-5
In Figure 10-5, which graph best illustrates the situation of an economy reacting to a recessionary gap by reducing resource cost levels?
A. (1) B. (2) C. (3) D. (4)
In a centrally planned economy, the concept of marginal cost
A) is important if planners want to achieve their objectives at the lowest possible cost. B) is irrelevant because resources can be obtained by government decree. C) is irrelevant because socialist firms do not have to earn profits. D) is irrelevant if industries can be subsidized.
Surgical specialists earn more than general/family practice physicians. Which of the following statements is not true regarding this income differential?
a. Surgeons earn more because their practice costs, including medical malpractice insurance is higher. b. Surgeons earn more to compensate them for the extra years spent as residents. c. Physicians' incomes are determined to a large extent by supply and demand conditions with respect to each specialty. d. Surgeons will always earn more than general practitioners because they are smarter than general practitioners. e. Surgeons earn more than general practitioners because cutting into people is messy.
In monopolistic competition:
a. firms collude with each other and act interdependently. b. there are substantial entry barriers. c. there are many close substitutes for the products offered by each firm. d. there are a few sellers each offering a unique product.