Answer the following questions true (T) or false (F)
1. Assume that the total for a given consumer, the marginal utility of food is 160 and the price of food is $40. Also, assume that the marginal utility of environment quality is 500 and the price of environmental quantity of $100. This consumer should partake in more environmental quality.
2. A good is said to be both normal and a necessity if the income elasticity of demand is greater than 1.0.
3. We expect the sign of the cross-price elasticity between pancakes and maple syrup to be negative.
1. TRUE
2. FALSE
3. TRUE
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The figure above provides information about Light-U-Up Utilities, which is a natural monopoly that provides electricity. At the unregulated price and quantity, Light-U-Up's economic profit is equal to
A) -$10. B) $10. C) $40. D) $60.
A decrease in the price level results in a(n) ________ in the quantity of real GDP demanded because a lower price level ________ consumption, investment, and net exports
A) decrease; decreases B) increase; increases C) increase; decreases D) decrease; increases
Suppose all firms have constant marginal costs that are the same for each firm in the short run. In this case, the market level supply curve is ________ and producer surplus equals ________:
A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, fixed costs D) perfectly elastic, zero
Which of the following is true if the international price of coffee increases?
a. The demand for tea, a substitute good, will decrease. b. The demand for coffee will increase. c. The demand for coffee and tea will decrease. d. Both the demand for coffee and tea will increase. e. The demand for tea, a substitute good, will increase.