How are the following events likely to affect the market supply of rice in an economy?
a) A fall in the wage rate of farm labor
b) An increase in the productivity of farm capital due to better technology
c) An increase in the use of agricultural land for non-agricultural purposes
a) A fall in the wage rate of farm labor will lower the cost of producing rice, allowing farmers to supply more at the same market price. As such there will be an increase in the supply of rice, and this will be represented by a right shift in the market supply curve.
b) An increase in the productivity of farm capital implies a fall in the cost of production. This will allow farmers to supply more at a given price. This will be represented by a right shift in the market supply curve for rice.
c) An increase in the use of agricultural land for non-agricultural purposes will imply a fall in the scale and size of producers. As such there will be a decrease in the supply of rice, and this will be represented by a left shift in the market supply curve of rice.
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Microsoft found that instead of producing a dvd player and a gaming system separately, it is cheaper to incorporate dvd playing capabilities in their new version of the gaming system. Microsoft is taking advantage of
a. Economies of Scale b. Learning curve c. Economies of Scope d. Decreasing marginal costs
In economic theorizing, common sense will always lead to the correct answer.
Answer the following statement true (T) or false (F)
Mitchell's money income is $150, the price of X is $2, and the price of Y is $2. Given these prices and income, Mitchell buys 50 units of X and 25 units of Y. Call this combination of X and Y bundle J. At bundle J, Mitchell's MRS is 2. At bundle J, if Mitchell increases consumption of Y by 1 unit, how many units of X can he give up and still reach the same level of utility?
A. 4 B. ½ C. 1 D. 2
Consider two countries, Estonia and Ukraine. Estonia devotes a larger portion of its production to capital. All other things equal, which of the following statements is most likely true?
A. Ukraine is producing inside its production possibility frontier, whereas Estonia is producing at a point on its production possibility frontier. B. Estonia will move up its production possibility curve faster than Ukraine. C. Estonia's production possibility frontier will shift up and out farther and faster than Ukraine's. D. Estonia is a poorer country than Ukraine.