Preston goes to the movies every Sunday afternoon. The movie theater offers 4 combinations of popcorn and beverages: the "mini-combo" costs $5 and includes a small popcorn and a small drink, the "medium-combo" costs $7 and includes a medium popcorn and a medium drink, the "value-combo" also costs $7 and includes a small popcorn and a large drink, and the "large-combo" costs $9 and includes a
large popcorn and a large drink. Preston always purchases the "value-combo.". We can conclude that
a. Preston cannot afford the "large-combo.".
b. Preston cannot afford the "medium-combo.".
c. Preston prefers a combo with a larger popcorn-to-beverage ratio.
d. Preston prefers a combo with a smaller popcorn-to-beverage ratio.
d
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The short run is that period in which firms: a. are free to vary all inputs
b. are able to vary some, but not all, inputs. c. can vary inputs, but only by varying all of their inputs in equal proportion. d. cannot increase production at all.
In the long run, a year-long drought that destroys most of the summer's wheat crops causes permanently:
A. higher prices. B. lower prices. C. lower output. D. None of these is true.
The number of times per year that a dollar is spent on final goods and services defines
A. GDP. B. the income velocity of money. C. the money supply. D. the price index.
If a perfectly competitive firm's price is above its average total cost, the firm
A) is earning a profit. B) should shut down. C) is incurring a loss. D) is breaking even.