The most plausible reason why changes in the price of cotton can cause shifts in the supply curve for tobacco is:
A. cigarette smokers often wear cotton shirts.
B. when incomes rise, people consume more cotton and tobacco.
C. firms can switch from growing tobacco to cotton and vice versa.
D. tobacco is an input in the production of cotton.
Answer: C
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Use the following graphs to answer the next question.
In the diagrams above, AD1 and AS1 represent the initial state of an economy. If full-employment output is at Q2, which diagram represents the adjustment back to full employment output in the absence of government intervention? ________.
A. panel (A) only B. panel (B) only C. panel (C) only D. panels (B) and (C)
Which of the following would prevent a market from being classified as perfectly competitive?
a. there are many buyers and sellers in the market b. it is easy for new firms to enter the market c. it is easy for existing firms to exit the market d. buyers perceive significant differences among the products of different sellers e. each buyer purchases only a tiny fraction of the total market quantity
National income minus personal taxes net of transfer payments equals disposable income.
Answer the following statement true (T) or false (F)
You have just purchased a new DVD player to show videos to your customers. The DVD player cost $500, and you depreciate the machine at a rate of 25% each year. You can borrow money from the bank at 10%, or receive 6% for depositing money at the bank. The expected inflation rate in the coming year is 5%. You used the company's own funds to purchase the DVD player. The firm's user cost of capital for the first year is
A. $130. B. $150. C. $155. D. $175.