The following question is an example of microeconomic analysis, "What determines the price of gasoline in a particular city or town?"
Indicate whether the statement is true or false
TRUE
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When the average product is decreasing, marginal product
A) equals average product. B) is increasing. C) exceeds average product. D) is decreasing. E) is less than average product.
Franco's Frozen Ice produces Italian flavored ice that is sold in the freezer section of grocery stores. Currently, Franco's does not have a fixed advertising budget and advertises in grocery stores' weekly advertising flyers and on the radio. A unit of advertising in the weekly flyers costs $1,500 and a unit of advertising on the radio costs $4,500. At their current advertising levels, the
marginal benefit of advertising in the flyer is $1,750 and the marginal benefit of advertising on the radio is $5,000. Which of the following is true? A) To maximize profits, Franco's should increase the amount of advertising in flyers and on the radio. B) To maximize profits, Franco's should increase the amount of advertising in flyers, but not change the amount of advertising on the radio. C) Franco's is currently maximizing its profits from advertising. D) To maximize profits, Franco's should decrease the amount of advertising in flyers and on the radio.
An inferior good is:
a. any good of low quality. b. one that consumers buy less of at a higher price. c. one that consumers buy less of as their income rises. d. one that has few substitutes. e. any good made with inexpensive labor.
As a competitive economy uses its stocks of a depletable resource,
a. the resource price will fall by ever greater amounts each year. b. the resource price will rise by ever greater amounts each year. c. the use of the resource will increase at an increasing rate. d. resource use will drop to zero.