Refer to Scenario 3.3 below to answer the question(s) that follow.SCENARIO 3.3: -Mustard and mayonnaise are substitutes. -Mustard and relish are complements. -Mustard is a normal good. -During the summer, about 50% of all mustard was recalled by manufacturers and removed from store shelves.Refer to Scenario 3.3. If at the same time of the mustard recall, consumer income also decreased. Then, ceteris paribus, in the market for mustard this would have caused
A. the equilibrium price to increase and the equilibrium quantity to decrease.
B. both the equilibrium price and quantity to decrease.
C. the equilibrium quantity could have increased, decreased, or remained the same and the equilibrium price to decrease.
D. the equilibrium price to either increase, decrease, or remain the same and the equilibrium quantity to decrease.
Answer: D
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Farmer Jane grows wheat on land that is bought and paid for. She figures her profit per acre is $60 because she puts $30 of purchased inputs onto each acre, $10 worth of her time into working on each acre, and the harvested wheat sells for $100. Farmer Jane
a. has correctly calculated her economic profit. b. has forgotten to include the opportunity cost of the land in her calculation of profit. c. should not have included the value of her time in calculating profits. d. should not have included any costs in calculating her economic profit.
According to the new Keynesian theory, the widespread importance of small menu costs results in variations in aggregate demand causing both
A) smaller short-run adjustments in real GDP and immediate adjustment in the price level. B) smaller short-run adjustments in real GDP and delayed adjustment in the price level. C) greater short-run adjustments in the real GDP and immediate adjustment in the price level. D) greater short-run adjustments in real GDP and delayed adjustment in the price level.
Refer to Figure 4-17. Suppose the market is initially in equilibrium at price P1 and then the government imposes a tax on every unit sold. Which of the following statements best describes the impact of the tax?
A) The consumer's share of the tax burden is the same whether the demand curve is D1 or D2. B) The consumer will bear the entire burden of the tax if the demand curve is D2 and the producer will bear the entire burden of the tax if the demand curve is D1. C) The consumer will bear a smaller share of the tax burden if the demand curve is D1. D) The consumer will bear a smaller share of the tax burden if the demand curve is D2.
Decision trees can only be used to analyze sequential games
Indicate whether the statement is true or false