Refer to the table below. Suppose the perfectly competitive market for dairy products had a 40 percent chance of a high price of $3.00 and a 60 percent chance of a low price of $2.00. However, both Happy Cows and Free Cows have revised their probabilities and now believe that the probability of a high price of $3.00 is 80 percent and the probability of a low price of $2.00 is 20 percent. If the
managers of Happy Cows want to maximize expected profit based on the new probabilities by how much will they change the quantity produced?
Happy Cows and Free Cows are two separate perfectly competitive dairy farms. The table above shows the respective firms' marginal cost at various production levels.
A) Happy Cows will decrease their production by 20 units.
B) Happy Cows will decrease their production by 40 units.
C) Happy Cows will increase their production by 40 units.
D) Happy Cows will increase their production by 20 units.
C) Happy Cows will increase their production by 40 units.
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If the demand and supply both increase equally, then the equilibrium price ________ and the equilibrium quantity ________
A) increases; increases B) increases; does not change C) does not change; increases D) increases; decreases E) decreases; does not change
If the money supply is $350 and PQ is $1,400, according to the quantity theory of money, the velocity of money is
a. 35.0. b. 7.5. c. 4.0. d. 0.25.
Which of the following would be the most typical behavior for landlords renting rent-controlled apartments?
a. financing the construction of more housing b. earning large profits from rentals c. lowering the rents for apartments d. avoiding routine maintenance
The graph above shows the relationship between consumption and income. The ratio LM/PL would be a measure of the:
A. Marginal propensity to consume
B. Marginal propensity to save
C. Average propensity to consume
D. Average propensity to save