In Exhibit 1, what is the consumer surplus depicted when the quantity is three units?
a. $4
b. $2
c. $1
d. $0
c. $1
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Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. Mike's opportunity cost of producing one car is ________ pound(s) of cheese.
A. 1/250 B. 500 C. 1/20 D. 250
In examining consumer behavior, one of the constraints faced by consumers is
a. happiness b. quantities consumed c. tastes and preferences d. entrepreneurial ability e. income
Suppose when the price of a can of tuna is $1.30, the quantity demanded is 9, and when the price is $1.50, the quantity demanded is 7. Using the mid-point method, the price elasticity of demand is:
A. 29 percent B. 0.57 C. -0.57 D. -1.75
The Hawaiian island of Lana'i is privately owned by Castle & Cooke and for generations most of its land was used to grow pineapples. Now, many of the pineapple fields have been replaced by tourist accommodations, including a pair of world-class hotels and a top rated golf course. What would an economist say about this change in land-use patterns?
A. Economic rent has allocated the island's resources to their highest valued use: tourism. B. Agriculture is still the land's highest-valued and most efficient use, but tourism earns more profits for Castle & Cooke. C. To find the land's economic rent, add the price per acre that land on Lana'i would be worth if used to grow pineapples to the value per acre when used for a golf course. D. While growing pineapples used the island's land more efficiently, tourism provides utility to the largest number of people.