Suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains this situation?
A) The supply of Florida oranges decreased, causing the supply of California oranges to increase, which resulted in a higher price.
B) The supply of Florida oranges decreased, causing the supply of California oranges to decrease, which resulted in a higher price.
C) The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase.
D) The demand for Florida oranges fell because of the freeze, and this led to a higher demand for California oranges.
Answer: C
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In a perfectly competitive market, total revenue:
A. measures how much revenue the firm takes in from all sales less any costs they incur. B. is equal to price multiplied by quantity sold. C. varies due to changes in price, since quantity is constant. D. should vary across firms.
Economists believe that people's wants are
A) finite. B) infinite. C) irrational. D) unimportant because needs are more important than wants.
A customer service representative in Nebraska who loses his job because the company relocated the customer service department to India represents an example of
A. structural unemployment. B. cyclical unemployment. C. frictional unemployment. D. seasonal unemployment.
If there are four firms in an industry and each has a 25 percent market share, then the Herfindahl-Hirschman Index equals
A. 2,500. B. 2,800. C. 5,000. D. 6,600.