Table 1.3 shows the hypothetical trade-off between different combinations of brushes and combs that might be produced in a year with the limited capacity for Country X, ceteris paribus.Table 1.3Production Possibilities for Brushes and CombsCombinationNumber of combsOpportunity Cost(Foregone brushes)Number of brushesOpportunity Cost (Foregone combs)J4 0NAK3 10 L2 17 M1 21 N0NA23 On the basis of Table 1.3, in the production range of 21 to 23 brushes the opportunity cost of producing one more comb in terms of brushes is
A. 4.
B. 1/21.
C. 1/2.
D. 21/23.
Answer: C
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An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
A) a decrease in the equilibrium quantity of lobster and no change in the equilibrium price. B) an increase in the equilibrium price of lobster and no change in the equilibrium quantity. C) a decrease in the equilibrium quantity of lobster; the equilibrium price may increase or decrease. D) an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
A price ceiling:
a. is the lowest price that the law will allow to be charged in the market. b. is the highest price that the law will allow to be charged in the market. c. is the price that must be charged in the market. d. would be imposed if the government believes the market equilibrium price is too low. e. would only be applicable in the case of non-essential goods.
The figure below shows the national market for mopeds in a country. Dd and Sd are the domestic demand and supply curves of mopeds, respectively.
Calculate the welfare loss arising from the production effect of the tariff.
A. $14 million B. $7.5 million C. $2.5 million D. $5 million
Which of the following is correct?
A. The excess capacity problem diminishes as the monopolistically competitive firm's demand curve becomes less elastic. B. The excess capacity problem means that monopolistically competitive firms typically produce at some point on the rising segment of their average total cost curve. C. The greater the degree of product variation, the lesser is the excess capacity problem. D. The greater the degree of product variation, the greater is the excess capacity problem.