If a firm is a price taker, the demand curve faced by the firm is:
A. horizontal.
B. vertical.
C. downward sloping.
D. upward sloping.
Answer: A
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What will be an ideal response?
Exhibit 3-8 Demand and Supply Data for Video Games ? Price Quantity Demanded of Video Games Quantity Supplied of Video Games $75 400 900 70 450 850 65 500 800 60 550 750 55 600 700 50 650 650 45 700 600 40 750 550 ? In Exhibit 3-8, if there is a surplus of video games of 200 units, the current price of video games must be:
A. $60. B. $50. C. $45. D. $40.
Economic growth is determined by forces outside the control of the market system.
Answer the following statement(s) true (T) or false (F)
Rachel spends her income, Y, on Rock Shows (R) and Sunglasses (S) with prices pR and pS. Rachel's preferences are given by the Cobb-Douglas utility function
U(X,Y) = R.8S.2 a. Write out the Lagrangian for Rachel's utility-maximization problem. b. Use the Lagrangian to derive Rachel's optimal choice, (R*,S*). c. For a given utility level, U0, derive Rachel's Expenditure function E(pR,pS,U0). d. Use the Expenditure function to derive Rachel's compensated demand for Rock Shows.