If cable TV subscriptions and movie rentals are substitutes for each other, what is the effect in each of these markets of an increase in wages for people who work for the cable TV company? Use your analysis to determine the sign of the cross
elasticity of demand between the quantity of movie rentals and the price of cable TV.
The supply curve of cable TV shifts leftward because wages are a cost of production, so the price of cable TV rises. Cable TV subscribers decrease the quantity of cable TV they demand (they move leftward along their demand curve for cable TV). Cable TV subscribers increase their demand for movie rentals (the demand curve for movie rentals shifts rightward) so that the equilibrium price and quantity of movie rentals both increase. Hence, when the price of cable TV goes up then the quantity of movie rentals increases, so their cross elasticity of demand is positive.
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A hike in the federal funds rate results in ________ in the real interest rate, which leads to ________ in investment
A) an increase; an increase B) an increase; a decrease C) a decrease; an increase D) a decrease; a decrease E) a decrease; no change
Which of the following is considered a depository institution?
I. the U.S. Treasury II. a commercial bank like Citibank III. a credit union for federal government employees A) I only B) I and II C) II and III D) I, II and III
A monopolist faces a demand curve given by P = 20 - Q and has total costs given by TC = Q2. By using a bit of calculus, you should be able to determine that the firm's marginal revenue is MR = 20 - 2Q and its marginal cost is MC = 2Q. Now suppose that the country in which this monopolist is located decides to engage in international trade. The world price of the product produced by the monopolist is $12. The profit-maximizing output level is 6, and the profit-maximizing price equals $12. What are its monopoly profits at this price and quantity?
a. $25 b. $36 c. $50 d. $75
At equilibrium, quantity sold equals the quantity bought. This implies that
A) to sell more, producers require more in payment than consumers are willing to pay. B) government regulation is necessary. C) to sell less would require a lower price but would yield greater profit. D) those who don't buy have been treated unfairly.