Suppose pigs (P) can be fed corn-based feed (C) or soybean-based feed (S) such that the production function is P = 2C + 5S. If the price of corn feed is $4 and the price of soybean feed is $5, what is the cost-minimizing feed combination producing P = 200?
a. C = 100
b. S = 40
c. C = 50, S = 20
d. C = 20, S = 50
b
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In a private closed economy (an economy with only a private sector and no international trade), the equilibrium condition for the economy is
A. C + Ig + G + NX = Y. B. AE = C + Ig + G = Y. C. AE = G + Ig = Y. D. AE = C + Ig = Y.
Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract. If the price level rises to 106 next year instead of 108, which of the following will occur?
A) Gretchen's real wage may rise or fall, depending on the unemployment rate. B) Gretchen's real wage will rise. C) Gretchen's real wage will fall. D) Gretchen's real wage will be unchanged.
The entry and exit of firms in a monopolistically competitive market guarantee that
A) firms can earn economic profits in the long run. B) price equals average total cost in the long run. C) marginal revenue equals marginal cost and average total cost is minimized. D) firms can earn economic profits in the short run.
Assume that supply increases greatly and demand increases slightly. Which of the following will happen?
a. Equilibrium price will fall and equilibrium quantity will rise. b. Equilibrium price will rise and equilibrium quantity will fall. c. Equilibrium price will rise and equilibrium quantity will rise. d. Equilibrium price will fall and equilibrium quantity will fall. e. Neither equilibrium price nor equilibrium quantity will change.