Good A is an inferior good. If the price of good A were to suddenly double, the substitution effect would cause the purchases of good A to increase by A) more than double. B) exactly double. C) less than double. D) Any of the above are possible. E) none of the above ANSWER E […]
Date: September 9th, 2020
For U.S. consumers, the income elasticity of demand for fruit juice is 1.1. If the economy enters a recession next year and consumer income declines by 2.5%, what is the expected change in the quantity of fruit juice demanded next year? A) -2.75% B) +2.75% C) -27.5% D) +27.5% ANSWER A
Date: September 9th, 2020
Refer to Figure 9.6. As a result of this policy, quantity will A) fall to 300. B) rise to 400. C) stay at 400. D) fall to 400. E) rise to 600. ANSWER E
Date: September 9th, 2020
Consider the following statements when answering this question. I. As Boeing’s production fell 10% to 100 planes last year, learning by doing cannot account for this year’s changes in long-run average costs. II. Failure to take into account the effects of learning by doing will lead to overestimates of the cost-output elasticity. A) I is […]
Date: September 9th, 2020
Refer to Scenario 12.3. What will be the price of this new drink in the long run if the firms in the industry collude with one another to maximize joint profit? A) $3 B) $9 C) $12 D) $16.50 E) none of the above ANSWER D
Date: September 9th, 2020
A 10 percent decrease in advertising results in a 5 percent sales decrease. The advertising elasticity of demand is ________. A) -2.0 B) -0.5 C) 0.5 D) 2 E) none of the above ANSWER C
Date: September 9th, 2020
To enforce the optimum level of emissions a government could set an emissions standard at the quantity A) where the MSB curve crosses the MCA curve. B) located at the vertical intercept of the MSB curve. C) located at the horizontal intercept of the MSB curve. D) located at the vertical intercept of the MCA […]
Date: September 9th, 2020
Cornucopia Media provides cable television service to several cities in the mid-Atlantic region. The firm has access to two new channels that focus on reality television programming, and the marginal cost of providing both new channels is zero. The first channel is Extreme Scottish Sports (ESS) and appeals to younger viewers, and the second channel […]
Date: September 9th, 2020
Assume that two individuals, A and B, are willing to trade products X and Y. Before a possible trade, A has the following marginal rates of substitution of X for Y (or of Y for X): MRSXYA = 0.80 (or equivalently, MRSYXA = 1.25). Also, before a possible trade, B has these marginal rates of […]
Date: September 9th, 2020
Suppose there are 10 apples and 10 oranges in the economy. Joe is currently consuming 4 apples and 5 oranges, and Jane is consuming 6 apples and 5 oranges. At this allocation, Joe’s marginal utility of apples is 3, and his marginal utility of oranges is 5. Jane’s marginal utility of apples is 6, and […]
Date: September 9th, 2020
