Which of the following would most likely cause the demand for veggi burgers to increase?
a. A decline in the price of veggie burger.
b. An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers.
c. An increase in the price of burger buns.
d. A technological innovation that lowers the cost of producing veggie burgers.
b
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Suppose that the marginal propensity to save (MPS) equals 0.8. The value of the multiplier would be
A) 0.2. B) 0.8. C) 1.25. D) 5.0.
A monopolist that practices perfect price discrimination
a. creates no deadweight loss. b. charges one group of buyers a higher price than another group, such as offering a student discount. c. charges a higher price but produces the same monopoly level of output as when a single price is charged. d. charges some customers a price below marginal cost because costs are covered by the high-priced buyers.
The government heavily subsidizes the production of ethanol to encourage the purchase of ethanol over oil, a less environmentally friendly form of energy. Given that the supply elasticity of ethanol, ?, is estimated to be about 0.13, what would the elasticity of demand, ?, have to be for consumers to receive at least half of the subsidy, and therefore encourage ethanol consumption?
A) ? must be less than |0.13|. B) ? must be greater than |0.13|. C) ? must be more inelastic than the elasticity of supply. D) Both A and C.
The Razor-Thin Disposable Razor Company is a perfectly competitive firm producing where MR = MC. The current market price of a disposable razor is $3.00. The firm sells 1,800 disposable razors. Its AVC is $2.00 and its AFC is $1.50. What should Razor-Thin do?
A. Decrease production so that AVC will decrease. B. Continue to produce because price exceeds AVC. C. Shut down and produce zero razors because price is less than ATC. D. Increase production so that AFC will decrease.