Assume the price of Nikes decreases. As a result, consumers increase the quantity of Nikes purchased each year and purchase fewer Reeboks. This is an example of the:
A. substitution effect.
B. income effect.
C. utility effect.
D. consumption effect.
Answer: A
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Like the short run
A) the long run supply curve is the sum of the individual firms' supply curves. B) the maximum number of firms in the market is fixed. C) firms operate only if they make a positive profit. D) All of the above.
Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $2,000 and a unit of advertising on the radio costs $5,000. At their current advertising levels, the
marginal benefit of advertising in the flyer is $2,500 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true? A) To maximize profits, Franco's should increase the amount of advertising in flyers. B) To maximize profits, Franco's should decrease the amount of radio advertising. C) To maximize profits, Franco's should decrease the amount of advertising in flyers. D) Franco's is currently maximizing its profits from advertising.
Maurice loses his job and decides to sit on the beach rather than looking for work the next few months. Other things the same, the unemployment rate
a. increases, and the labor-force participation rate is unaffected. b. increases, and the labor-force participation rate decreases. c. decreases, and the labor-force participation rate increases. d. decreases, and the labor-force participation rate decreases.
A farm can produce 10,000 bushels of wheat per year with 5 workers and 13,000 bushels with 6 workers. The marginal product of the sixth worker for this farm is:
a. 500 bushels. b. 10,000 bushels. c. 23,000 bushels. d. 3,000 bushels.