If movie theatres decided to increase the price for the movie tickets, holding other factors constant, what would happen to the demand for popcorn in the theatres?
a. the demand for popcorn would shift to the left because popcorn and movies are substitute goods
b. the demand for popcorn would shift to the left because popcorn and movies are complementary goods.
c. the demand for popcorn would shift to the right because popcorn and movies are substitute goods.
d. the demand for popcorn would shift to the right because popcorn and movies are complementary goods.
b
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Two firms, Alpha and Beta, produce identical computer hard drives. They have identical costs, and the hard drives they produce are identical. The industry is a natural duopoly
Alpha and Beta enter into a collusive agreement, according to which they split the market equally. If both firms comply with the agreement A) together they will operate in a way indistinguishable from a monopoly. B) the price of a hard drive will be equal to marginal cost. C) each firm will make zero economic profit. D) the oligopoly will produce more hard drives than a profit-maximizing monopoly would produce.
According to the law of demand, when will higher corn prices reduce the quantity demanded of corn?
A. Always. B. When the supply of corn is fixed. C. When nonprice determinants, like income and the number of buyers, are unchanged. D. When there are no shortages or surpluses of corn.
If a competitive firm routinely earns a larger profit than the "normal profit" for its industry,
A. the firm's owners are likely to withdraw from the industry in order to retire early. B. the firm will continue to earn its "normal profits" far into the future. C. new firms are likely to enter the industry, pushing up the prevailing market price. D. new firms are likely to enter the industry, depressing the prevailing market price.
Suppose that bank reserves (res) are a function of the nominal interest rate (i): res = 0.3 - 3i.The money multiplier is (cu + 1)/(cu + res), where cu is the currency-deposit ratio. Initially, suppose the real interest rate (r) equals 0.03, the expected inflation rate (pe) equals 0.03, and the currency-deposit ratio equals: cu = 0.4 - (10 × pe).The real money demand function is L(Y,i) = 0.8Y - 1500i, where Y is the level of output. The monetary base equals 100. The price level equals 1.0 initially and will not change in the short run, but will adjust in the long run.(a)Calculate the currency-deposit ratio, the reserve-deposit ratio, the money multiplier, the money supply, and the equilibrium level of output. Assume that this level of output equals full-employment output, so
you are assuming that the economy is in general equilibrium with the price level equal to 1.0. Show your work.(b)Suppose financial innovation causes the reserve-deposit ratio to decline to res = 0.2 - 3i. Calculate the new currency-deposit ratio, the reserve-deposit ratio, the money multiplier, the money supply, and the equilibrium level of output in the short run, assuming a Keynesian model with the price level fixed in the short run. Show your work.(c)Calculate the equilibrium price level in the long run. Show your work. What will be an ideal response?