Good A has an income elasticity equal to -0.8 and a cross price elasticity with respect to Good B of -0.75 . Then:
a. Good A is an inferior good and Goods A and B are substitutes.
b. Good A is an inferior good and Goods A and B are complements.
c. Good A is a normal good and Goods A and B are substitutes
d. Good A is a normal good and Goods A and B are complements.
b
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Two identical firms have access to a spring. Their marginal cost of bottling water from the spring is a constant 10ยข per bottle. The market demand for bottled spring water is P = 250 - 20Q, where P is the price (in cents per bottle) and Q is the quantity demanded (in hundreds of bottles).
(i) Suppose the two firms form a successful cartel. How much bottled water will the firms produce, and what price will they charge? (ii) Suppose the firms behave as in the Bertrand model of oligopoly. How much bottled water will the firms produce, and what price will they charge? (iii) Suppose the firms behave as in the Cournot model of oligopoly. How much bottled water will the firms produce, and what price will they charge?
The Principle of Increasing Opportunity Costs states that:
A. opportunity costs increase when too little is produced. B. when increasing production, resources with the lowest opportunity costs should be used first. C. when increasing production, resources with the lowest opportunity costs should be used last. D. productive people do the hardest tasks first.
When a second firm enters a monopolist's market:
A. the former monopolist's average cost decreases as its output level decreases. B. the demand curve facing the former monopolist shifts to the right. C. the market price falls. D. None of these
A natural monopoly that is NOT regulated will choose to produce at the
A) minimum point of the long-run average cost curve. B) point at which marginal cost is above average total cost. C) point at which the demand curve intersects the long-run average cost curve. D) point at which marginal revenue equals marginal cost.