When the relative price of a good decreases, consumers respond by buying
a. a larger quantity of that good and a larger quantity of substitutes for that good.
b. a larger quantity of that good and a smaller quantity of substitutes for that good.
c. a smaller quantity of that good and a larger quantity of substitutes for that good.
d. a smaller quantity of that good and a smaller quantity of substitutes for that good.
b
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In the long run, a perfectly competitive firm maximizes profit so P = MC = AC.
Answer the following statement true (T) or false (F)
According to the text, the 17 countries with high degrees of economic freedom
A) account for 81 percent of total world output. B) account for less than 25 percent of total world output. C) have the weakest economies. D) have low productivity.
Suppose a production function is q = K1/2L1/3 and in the short run capital (K) is fixed at 100 . If the wage is $10 and the rental rate on capital is $20, the fixed cost is
a. $2,000 b. $200 c. $20,000 d. $0
Thomas Malthus argued that population grows geometrically and the food supply grows arithmetically
a. True b. False