Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. Given the scenario described, if the market price of hammers decreased from $17 to $12:
A. producer participation in the market would decrease.
B. total producer surplus would remain unchanged.
C. producer participation in the market would not be affected.
D. producer participation in the market would increase.
Answer: A
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Basil is maximizing his utility from consuming tea and crumpets. If the marginal utility of his last cup of tea was 24 units of utility and that of his last crumpet was 6 units of utility, which of the following is true?
a. The price of tea is six times the price of crumpets. b. The price of crumpets is four times the price of tea. c. The prices of tea and crumpets are equal. d. The price of tea is four times the price of crumpets. e. The MU of the next cup of tea is less than the MU of the next crumpet.
According to the interest rate effect, as the price level:
a. rises, people feel poorer and buy less. b. rises, United States products become more expensive and foreigners buy less U.S. goods. c. rises, interest rates fall, and people buy less. d. rises, interest rates rise, and people buy less. e. falls, interest rates fall, and people buy less.
If a firm's total fixed costs are $30, the firm's marginal cost of producing the first unit of output is $30, and the average total cost of producing two units of output is $42, the marginal cost of the second unit of output is:
A. $84. B. $54. C. $42. D. $24.
Which of the following is NOT correct regarding the theories of income distribution?
A) Dealing with how income ought to be distributed is a normative issue. B) The productivity standard for the distribution of income is stated "to each according to what they produce." C) The egalitarian principle of income distribution is "to each exactly the same." D) Dealing with how income should be distributed is a positive economic issue.