Given the scenario described, if the market price of hammers increased from $6 to $8:
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13.
A. producer participation in the market would increase.
B. producer participation in the market would decrease.
C. producer participation in the market would remain unchanged.
D. total producer surplus would increase by $2.
A. producer participation in the market would increase.
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Forward contracts are of limited usefulness to financial institutions because
A) of default risk. B) it is impossible to hedge risk. C) they are relatively inflexible. D) of interest-rate risk.
Diminishing marginal rate of substitution can be seen when indifference curves
A) cross. B) are convex. C) are downward sloping. D) become flatter as we move down and to the right.
Mars Inc produces 100,000 boxes of Snickers bars which sell for $4 a box. If variable costs are $3 per box, and it has $150,000 fixed operating costs, in the short run, it should
A) shut down as fixed costs are not being covered. B) keep producing as profits are $50,000. C) keep producing as variable costs are being met. D) keep producing as total costs are being recovered.
Ways to "game" the budgeting process include
a. delaying sales if just short of a target b. accelerating expenses if just short of a target c. delaying sales once a target is met d. delaying expenses costs once a target is met