If marginal costs exceed marginal benefits, then:
A. the firm should decrease its production level.
B. the firm's average costs exceed average benefits.
C. the firm ends up with a net loss.
D. None of the statements associated with this question are correct.
Answer: A
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Use the following graph, where Sd and Dd are the domestic supply and demand curves for a product, to answer the next question.
Suppose the world price of the product is $6. If this market is closed to international trade the total revenue that would go to domestic producers would be ________, and if the market is open to international trade the total revenue for domestic producers would be______.
A. $500; $240 B. $600; $240 C. $600; $120 D. $240; $120
For each of the following pairs of products, state which are complements, which are substitutes, and which are unrelated
a. Digital camera and memory stick b. 7Up and Mountain Dew c. Swimsuits and flip-flops d. Tylenol and cat food e. Photocopier and paper
Bob's winery sells bottles of their expensive, high-quality wine and a cheaper low-quality wine. Visitors have to drive 45 minutes to get to Bob's winery
Bob also sells his wine at a shop in the city where consumers don't have to drive a long distance and charges the same prices. Assuming the preferences of the clients that come to the winery and the city store are the same, explain why Bob tends to sell the expensive wine in a greater proportion in the winery than the urban store.
Vertical integration has no effect on the internal organization of a firm; it only affects the outside markets
a. True b. False