Think of the aggregate expenditure model. At the point where the aggregate expenditure curve intersects the 45-degree (or income) line,
a. C = I
b. I = C + S
c. Y = S
d. Y = S + I
e. S = Ii
E
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At an output level of 8 thousand bushels, explain in terms of both marginal profit and total profit why the individual farmer should expand production.
In the competitive market for organic corn, market demand is QD = 340 – 2P and market supply is QS= 100 + 4P, where P is the price per bushel, and Q is market output in thousands of bushels. Each individual farmer faces a marginal cost function of MC = 10 + 3q, where q is the single farmer’s output level in thousands.
Scarcity means we must
A) consume less. B) produce less. C) make choices. D) earn more. E) work more.
If the cost of labor increases, the isocost line will
A) stay the same. B) shift outward in parallel fashion. C) rotate inward around the point where only capital is employed in production. D) shift inward in parallel fashion.
In a competitive price-searcher market, the firms will
a. be able to choose their price, and the entry barriers into the market will be low. b. be able to choose their price, and the entry barriers into the market will be high. c. have to accept the market price for their product, and the entry barriers into the market will be low. d. have to accept the market price for their product, and the entry barriers into the market will be high.