Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.
Figure 9.2Refer to Figure 9.2. Suppose demand for wheat is initially D2. If the price of rice (a substitute for wheat) rises, then demand for wheat will shift to ________. This will ________ the equilibrium price of wheat and individual profit-maximizing firms will produce ________ bushels of wheat.
A. D1; increase; 13
B. D3; increase; 15
C. D3; decrease; 10
D. D1; decrease; 0
Answer: B
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The manager of a firm receives an engineering report claiming that an additional hour of capital would add twice as much output as would an additional hour of labor. According to the firm's accountants, an hour of capital costs 3 times more than an hour of labor.
(i) Is the firm on its expansion path? Why or why not? (ii) Suppose the firm is under contractual obligations to keep its output at current levels. What long-run adjustment (if any) should the manager make in the firm's employment of labor and capital? (iii) Sketch an isoquant-isocost diagram that illustrates the situation described in part ii. Label the initial situation "A" and the post-adjustment situation "B." The scale of your diagram does not need to be accurate.
When playing a game, you need to
A) anticipate the moves others might be making. B) choose a strategy based on the move you anticipate from your rival. C) both A and B D) neither A nor B
The most commonly traded product (by value) in recent years has been
A) petroluem. B) wheat. C) televisions, stereos, and VCRs. D) automobiles.
Which of the following is TRUE about monopolistic competition?
A) One firm serves as the entire industry. B) A small number of firms serve the entire market. C) It is competition among many firms producing similar but differentiated products. D) The pattern of production and trade is difficult to predict. E) It enjoys no economies of scale.