When a resource can earn as much in its best alternative use as in its present use, then the supply curve of the resource is:
a. upward sloping.
b. backward bending.
c. downward sloping.
d. horizontal to the x-axis.
d
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Firms may experience diseconomies of scale when
a. they are too small to take advantage of specialization. b. large management structures are bureaucratic and inefficient. c. there are too few employees, and managers do not have enough to do. d. average fixed costs begin to rise again.
Two members of the Kenyan parliament from coffee-growing areas said that no firm should have a monopoly to market Kenyan coffee. The retail coffee company Tetu Coffee has sparked a storm in the industry by promising to earn the country Sh400 (Kenyan Shilling) billion annually if given exclusive licenses to market Kenyan coffee. The members of parliament said the coffee bean farmers should be free to sell their beans to the highest bidder. What would create a market with one buyer in the situation described?
A. Tetu Coffee has the ability to outcompete other coffee buyers. B. The government prohibits other buyers. C. There are economies of scope. D. There are economies of scale in purchasing coffee.
Answer the following statements true (T) or false (F)
1. According to the circular flow model of the market system, when resource-owners' money income is rising, then the costs to business firms must be falling. 2. Have a high fixed salary is what motivates entrepreneurs to make prudent decisions is dealing with business risk. 3. Government bailouts of failing businesses, like banks during the recent economic crisis, will tend to reduce the motivation among entrepreneurs to make prudent decisions is dealing with business risk. 4. College graduates who dislike business risk will mostly seek to be hired by firms as labor, rather than starting their own firms.
The first step of the four step process is to
a. identify the new equilibrium and then compare the original equilibrium price and quantity to the new equilibrium price and quantity. b. decide whether the economic change being analyzed affects demand or supply. c. draw a demand and supply model before the economic change took place. d. decide whether the effect on demand or supply causes the curve to shift to the right or to the left, and sketch the new demand or supply curve on the diagram.