Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are
A) complements in consumption. B) both luxury goods.
C) both inferior goods. D) substitutes in consumption.
A
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If supply is elastic, the supply curve is relatively ________, and if demand is elastic, the demand curve is relatively ________
A) flat; flat B) flat; steep C) steep; flat D) steep; steep
The greater the product differentiation between monopolistically competitive firms
A) the lower the barriers to entry. B) the greater the price elasticity of demand. C) the higher the average variable costs. D) the lower the price elasticity of demand.
The profit-maximizing combination of resources in a perfectly competitive situation occurs at the point at which
A) MRP of labor = price of labor (wage rate). B) MRP of land = price of land (rental rate per unit). C) MRP of capital = price of capital (cost per unit of service). D) All of the above are correct.
If a country has an absolute advantage in the production of every good, it cannot benefit from trade with other countries
a. True b. False