Refer to the information provided in Figure 6.6 below to answer the question(s) that follow.
Figure 6.6Refer to Figure 6.6. Bill's budget constraint is CD. If the price of bell peppers increases, Bill's new budget constraint is
A. EF.
B. AD.
C. BE.
D. AO.
Answer: B
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HK Sweaters, Incorporated employs labor at a wage rate of $12 per hour and rents capital for$30 per hour. At its current level of labor and capital, the marginal product of labor is 24 and the marginal product of capital is 60
Is the firm currently maximizing profit? Explain.
Suppose a frost destroys the tomato crop in California but farmers see an increase in their revenues. Which of the following best explains this?
A) Tomatoes are necessities. B) The demand for tomatoes is price inelastic. C) The decrease in supply led to huge price increases. D) The cross-price elasticity between tomatoes and most other substitute vegetables is very low.
When the cross-price elasticity of demand for two goods is a positive number, one can correctly conclude that:
a. the goods are normal goods. b. the goods are inferior goods. c. the goods are substitutes. d. the goods are complements. e. total revenue will increase when the price increases.
The key characteristic of oligopoly markets is "interdependence among firms." This means that: a. the demand curve faced by each firm is perfectly elastic
b. each firm produces a product identical to its rivals. c. each firm must consider how its decisions will affect its competitors. d. firms will be able to earn above-normal profits in the long run.