Say a consumer is choosing between red wine and white wine. The price of red wine is 20 and the price of white wine is 10. If the marginal rate of substitution is 1, and if red wine is on the horizontal axis then the consumer is purchasing:
A. More than what her income would allow
B. Too much white wine
C. Just the right amount of both goods
D. Too much red wine
Answer: D
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The battery packs used in electric and hybrid automobiles are one of the largest cost components for manufacturing these cars. As the price of these batteries decline, we expect that the:
A) supply curve for electric and hybrid autos will shift rightward. B) supply curve for electric and hybrid autos will shift leftward. C) demand curve for electric and hybrid autos will shift rightward. D) demand curve for electric and hybrid autos will shift leftward.
Economic growth is best measured by increases in
A) per capita real Gross Domestic Product (GDP). B) nominal personal income. C) nominal Gross Domestic Product (GDP). D) per capita nominal Gross Domestic Product (GDP).
In the short run, a perfectly competitive ball bearing manufacturer will continue to produce at a loss if
a. it is covering all of its fixed cost b. it is covering all of its variable cost plus part of its fixed cost c. variable cost is less than fixed cost d. fixed cost is zero e. fixed cost is minimized
The demand for potatoes at current prices is likely to be
a. elastic. b. inelastic. c. unit elastic. d. perfectly elastic.