Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 30,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low.
B) producers should raise the price to $3 in order to sell the quantity demanded of 30,000.
C) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently high.
D) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high.
C
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Scooters and bicycles are substitutes. Suppose that the price of a bicycle falls. Which of the figures above best illustrates how this fall in price affects the demand curve for scooters?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the above answers is correct because the change in the price of a bicycle will affect the supply curve not the demand curve.
Social Security payroll taxes are
A. proportional with a rate of 7.65 percent. B. indirect taxes. C. progressive because total taxes increase with income. D. regressive because the tax is not applied after reaching an income threshold.
The _____ tends to increase an individual's demand for leisure.
A. income effect of a wage decrease B. law of increasing marginal utility C. substitution effect of a wage increase D. income effect of a wage increase
In the long run, diminishing returns would:
A. not exist because no input is held constant. B. not exist because all inputs are held constant. C. still exist at a lesser degree because inputs are allowed to vary. D. exist at a greater degree, because all inputs are allowed to vary.