Assume that the producers of an input have substantial economies of scale in their production process. This input is purchased mainly by a group of firms in a perfectly competitive market that is initially in long-run equilibrium. After all long-run adjustments are made, which of the following would occur in the competitive output market as a result of shift in consumer tastes toward that
market's product?
a. The market price would fall; the market quantity would rise.
b. The market price would rise; the market quantity would fall.
c. The market price would remain unchanged; the market quantity would fall.
d. Both the market price and the market quantity would fall.
e. Both the market price and the market quantity would rise.
A
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Redistribution can be thought of as insurance because _____
a. those with low incomes often do not think of purchasing insurance b. those with low incomes cannot afford insurance c. individuals want to protect themselves from the small probability that they might become impoverished d. a and b
A manager believes there is a 5 percent chance their firm will have to pay $1,000,000 and a 95 percent chance they will be found innocent and pay nothing except the legal fees of $100,000. If the manager chooses to not enter into the litigation and to settle for $150,000 (pay the plaintiff), which of the following is true?
A) The manager is a risk lover. B) The manager is risk neutral. C) The manager is risk intolerant. D) The manager is risk averse.
If the government wants to raise tax revenue and shift most of the tax burden to the sellers it would impose a tax on a good with a:
a. flat (elastic) demand curve and a steep (inelastic) supply curve. b. steep (inelastic) demand curve and a flat (elastic) supply curve. c. steep (inelastic) demand curve and steep (inelastic) demand curve. d. flat (elastic) demand curve and a flat (elastic) supply curve.
Refer to the accompanying figure. If this restaurant goes from producing 20 to 25 pizzas per hour, then which of the following statements is true?
A. It has to give up exactly 25 salads. B. It has to give up fewer than 12.5 salads. C. It has to give up exactly 12.5 salads. D. It has to give up more than 12.5 salads.