Suppose a freeze in Florida significantly reduces the supply of oranges this year. As a result, would you expect the total revenue from the sale of orange juice to rise or fall? Explain
Since oranges are an input into the production of orange juice, the increase in the price of oranges will reduce the supply of orange juice. When the price of orange juice rises, total revenue may rise or fall. If the demand for orange juice is inelastic, then total revenue will rise. On the other hand, if the demand for orange juice is elastic, then total revenue will fall.
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Refer to Figure 2.1. If you are producing 600 tons of agricultural products per year, what is the maximum amount of manufactured products you can produce per year?
A) 300 tons B) 500 tons C) 600 tons D) 700 tons
The interest rate that banks charge other banks for short-term loans is the:
a. discount rate. b. prime rate. c. treasury rate. d. federal funds rate. e. interbank rate.
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
In the short run, the relevant costs for a firm to consider whether to shut down production are:
A. average total costs. B. average variable costs. C. fixed costs. D. average fixed costs.