Which of the following decreases in labor demand is due to a change in the price of a related resource?
A. The rise of hair salons for both men and women reduces the demand for barbers.
B. A decline in the demand for computers in Europe reduces the demand for workers in the domestic computer industry.
C. An increase in the price of chemical equipment increases the cost of producing fertilizer, thus decreasing the demand for workers who make fertilizer.
D. A decrease in the educational skills of manufacturing workers decreases the demand for such workers.
Answer: C
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Pat used to work as an aerobics instructor at the local gym earning $35,000 a year. Pat quit that job and started working as a personal trainer. Pat makes $50,000 in total annual revenue. Pat's only out-of-pocket costs are $12,000 per year for rent and utilities, $1,000 per year for advertising and $3,000 per year for equipment. For Pat to earn normal profit, Pat's accounting profit would have to be ________.
A. 0 B. $35,000 C. $50,000 D. $15,000
A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the
A) demand for oil is elastic. B) demand for oil is inelastic. C) supply of oil is elastic. D) supply of oil is inelastic.
The actions of speculators
a. help smooth out price fluctuations. b. serve no useful economic purpose. c. make investment much more risky. d. cause severe shortages of some commodities.
Goods with many close substitutes tend to have
a. more elastic demands. b. less elastic demands. c. price elasticities of demand that are unit elastic. d. income elasticities of demand that are negative.