Abraham drinks Mountain Dew. He can buy as many cans of Mountain Dew as he wishes at a price of $0.55 per can. On a particular day, he is willing to pay $0.95 for the first can, $0.80 for the second can, $0.60 for the third can, and $0.40 for the fourth can. Assume Abraham is rational in deciding how many cans to buy. His consumer surplus is
a. $0.50.
b. $0.60.
c. $0.70.
d. $1.00.
c
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Land used for commercial Christmas trees can also produce pulpwood. Therefore, an increase in the expected market price of Christmas trees tends to
A) reduce the demand for Christmas trees. B) increase the supply of Christmas trees. C) increase the cost of producing pulpwood. D) decrease the cost of producing pulpwood.
Refer to Figure 2-6. If the economy is currently producing at point C, what is the opportunity cost of moving to point B?
A) 13 thousand hammers B) 30 thousand wrenches C) 23 thousand hammers D) 10 thousand wrenches
Only government restrictions serve as entry barriers.
Answer the following statement true (T) or false (F)
A normal good is defined as one
a. having a downward-sloping demand curve b. that is neither a luxury nor a basic good c. that is bought by consumers with normal tastes d. whose demand increases when incomes increase e. whose demand decreases when incomes increase