If coal and oil are substitute inputs in the production of electricity, an increase in the price of oil
a. will increase the demand for coal
b. will reduce the demand for coal
c. will increase the supply of coal
d. will reduce the supply of coal
e. will not affect the demand for coal
A
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Recall the Application. If country A has a lower overall income tax rate than country B, and labor can freely and easily move between the two countries, ________ in country B will tend to ________
A) labor supply; decrease B) labor demand; decrease C) labor demand; increase D) labor supply; increase
Bart consumes food and clothing, which are both normal goods. Suppose that the price of food falls. The substitution effect of this price decrease is ________ and the income effect of this price decrease is ________
A) that Bart buys more clothing and less food; that Bart buys more of both food and clothing B) reflected by a change in the relative prices of food and clothing; is represented by a movement along the original indifference curve C) reflected by a parallel shift outward of the budget line; that Bart earns more money each month D) reflected by the change in the slope of the budget line; that Bart has greater purchasing power
For a perfectly competitive firm operating at the profit-maximizing output level in the short run,
a. MR = TR b. MC = price c. MC = ATC d. MC = AVC e. AFC = price
Collusion
a. is exactly the same thing as competition. b. involves cooperative actions by sellers at the expense of buyers. c. requires competitive actions by sellers to win customers from rival firms. d. can only be achieved in price-taker markets.