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What is economic profit? How might it differ from accounting profit? Explain why firms that are making zero economic profit are likely to continue in business.
Sue loves ice cream but cannot stand frozen-yogurt desserts. In contrast, Carole likes both foods and can hardly tell the difference between the two. Who will have the more elastic demand for yogurt?
A consumer is currently purchasing three pairs of jeans and five T-shirts per year. The price of jeans is $30, and T-shirts cost $10. At the current rate of consumption, the marginal utility of jeans
A bus ticket between two cities costs $50 and the trip will take twenty-eight hours, whereas an airplane ticket costs $300 and takes three hours. Mary values her time at $12 per hour
What conditions must be met for buyers to bear the full burden of a tax? What conditions would cause sellers to bear the full burden? Explain.
To be meaningful, a price ceiling must be below the market price. Conversely, a meaningful price floor - must be above the market price. What impact will a meaningful price ceiling have on the quantit
What is the difference between a price ceiling and a price floor? What will happen if a price ceiling is imposed below the market equilibrium? If a price ceiling for a good is set below the market equ
Suppose that college students in your town persuaded the town council to enact a law setting the maximum price for rental housing at $200 per month.
How will a substantial increase in demand for housing affect the wages and employment of carpenters, plumbers, and electricians?
Do business firms operating in competitive markets have a strong incentive to serve the interest of consumers? Are “good intentions” necessary if individuals are going to engage in actions
How is the market price of a good determined? When the market for a product is in equilibrium, how will consumers value an additional unit compared to the opportunity cost of producing that unit? Why
The price of X and Y are $40 and $60 respectively. Use the following table of total utilities to answer the following questions.Good Total Utility of X Total Utility of Y
Vinnie’s Place has enjoyed its monopoly position selling fast food in Far West, VA. The manager, Vinnie Manicotti, has heard that his success has attracted the attention of other companies.
What"s wrong with this way of thinking? “Economists argue that lower prices will result in fewer units being supplied. However, there are exceptions to this rule. For example, in 1972
What is the difference between substitutes and complements? Indicate two goods that are substitutes for each other. Indicate two goods that are complements.
Using the following information, calculate total utility and marginal utility.a. Plot the total utility curve.b. Plot marginal utility directly below total utility.c. At what marginal utility value do
How would you characterize your demand for health insurance — elastic or inelastic? Does the price elasticity of health insurance vary with age, ethnicity, gender, etc.? Does it vary depending o
Suppose that the learning effect coefficient in the production of wrist watches is -0.2. If the average cost of producing the first watch is $100, what will be the average cost of producing the 40th w
The owner of a fast-food restaurant estimates that she can produce and sell 1,000 additional hamburgers per day by renting more automated equipment at a cost of $100 per day.
Which of the following properly describe the Aggregate Supply (AS) Curve in the Keynesian view? a) the AS curve is almost nearly vertical representing a full employment of the economy's factors of pro
The city of Falls Church, Virginia, subsidizes trees planted in homeowners' front yards when they are within 15 feet of the street. a. Using concepts in the chapte
The elasticity of demand for a product is likely to be greater (Points : 2) the smaller the number of substitute products available. the smaller the proportion of one's income spent on the product
Recently, however, a major competitor launched a new line of athletic shoes. The firm now revises sales forecast downward to 14,000 units, with the unit contribution margin remaining the same. Should
Redraw the Demand curve (only) in a new diagram. Demonstrate the Total Revenue change geometrically and indicate the Loss and Gain areas between the prices of $6 and $2 (Price has moved UP from $2 to