Strawberries are produced in a perfectly competitive market. Average consumer incomes decrease. This will cause the individual strawberry farmer's marginal revenue to ________ and their profit-maximizing level of output to ________.
A. increase; increase
B. increase; decrease
C. decrease; increase
D. decrease; decrease
Answer: D
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The Maastricht treaty was the first step toward
A) having free trade between Russia and China. B) European monetary union. C) gaining credibility for monetary policy. D) reducing the costs of disinflation.
If an upstream monopoly and a downstream monopoly vertically integrate into a profit-maximizing monopoly, then the total amount of deadweight loss in the industry
A) will increase. B) will decrease. C) will remain unchanged. D) cannot be determined.
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's risk level rises relative to England and nothing else changes, then
a. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing an appreciation of the Swiss franc. b. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market rises, causing an appreciation of the Swiss franc. c. Neither supply nor demand in the foreign exchange market change because relative international prices influence trade flows and not the exchange rate. d. The supply of Swiss francs in the foreign exchange market rises, and the demand for Swiss francs in the foreign exchange market falls, causing a depreciation of the Swiss franc. e. The supply of Swiss francs in the foreign exchange market falls, and the demand for Swiss francs in the foreign exchange market falls, causing an uncertain change in the value of the Swiss franc.
When supply increases and at the same time demand decreases, we
A) can predict that both equilibrium price and quantity will increase. B) can predict that both equilibrium price and quantity will decrease. C) cannot predict equilibrium quantity, but know that equilibrium price will decrease. D) cannot predict the change in either the equilibrium quantity or equilibrium price.