At a supermarket, the price of organic milk increases by 20 percent. According to the law of demand, the sale of organic milk would most likely ______.
a. decrease by 10 percent
b. increase by 15 percent
c. fluctuate between a 5 percent increase and a 5 percent decrease
d. stay approximately the same
a. decrease by 10 percent
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You have just read that Australia has suffered a drought, destroying its wheat crop for this year. The effect of this adverse supply shock on Australia would probably be
A) an increase in prices and an increase in real interest rates. B) an increase in prices, an increase in nominal interest rates, but a decrease in real interest rates. C) a decrease in prices and a decrease in real interest rates. D) a decrease in prices, a decrease in nominal interest rates, but an increase in real interest rates.
The expansion path for a homothetic production function:
a. is a straight line through the origin with a slope greater than one if w > v. b. is a straight line through the origin with a slope less than one if w < v . c. is a straight line through the origin though its slope cannot be determined by w and v alone. d. has a positive slope but is not necessarily a straight line.
Suppose Larry's Lariats produces lassos in a factory, and uses nine feet of rope to make each lasso. The rope is put into a machine that automatically cuts it to the right length, then seals the ends to prevent fraying. The rope is then hand tied, dipped, and wound before being placed in a packaging machine to prepare it for retail sale. Which of the following would be considered a fixed cost for this company?
A. The packaging material B. The cost of rope C. Employee wages D. None of these would be considered a fixed cost.
According to Chamberlin, the fact that in the long run average total cost exceeds its minimum value under monopolistic competition is
A) the social cost of monopolistic competition. B) the most important reason for why monopolistic competition is not efficient. C) part of the cost of producing different products for consumers. D) actually beneficial because it makes adjustments easier when demand increases.