Which of the following is true about optimal search?
a. Optimal search occurs where the marginal benefit of search just equals the marginal cost of search, where the two curves intersect.
b. Optimal search occurs when the total benefit of search exceeds the total cost of search.
c. Optimal search occurs where the marginal benefit of search is equal to zero.
d. Optimal search occurs when the marginal cost of search exceeds the marginal benefit of search.
a
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How does an increase in the price level affect the aggregate planned expenditure curve and the aggregate demand curve?
What will be an ideal response?
Laura Kaid owns a business and is willing to invest in capital until, at the margin, her investment yields a cash stream with a present value less than the marginal cost of the investment
a. True b. False
Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?
A) The supply of Florida oranges decreased, causing the supply of California oranges to increase, which resulted in a higher price. B) The supply of Florida oranges decreased, causing the supply of California oranges to decrease, which resulted in a higher price. C) The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase. D) The demand for Florida oranges fell because of the freeze, and this led to a higher demand for California oranges.
A monopolist finds the output (Q*) rate that maximizes profit. It finds the price by
A) taking the height of the marginal revenue curve at output rate Q. B) taking the height of the marginal cost curve at output rate Q. C) taking the height of the demand curve at output rate Q. D) setting price equal to marginal cost.