A donut shop has noticed that when they increase the price o…
A donut shop has noticed that when they increase the price of chocolate donuts by 5%, the quantity demanded of breakfast sandwiches decreases by 1%. The cross-price elasticity of demand for breakfast sandwiches is _____, so the two foods are _____.
Read DetailsRefer to the following figure. Suppose a firm spends $4,000…
Refer to the following figure. Suppose a firm spends $4,000 per day producing a good. The wage rate per worker is $400 per day and rental rate per unit of capital is $1,000 per day. The firm’s isocost line at the current expenditure level is represented by
Read DetailsSuppose that the inverse demand in a market is P = 100 – 2Q….
Suppose that the inverse demand in a market is P = 100 – 2Q. A firm’s marginal cost is constant and equal to $50. If the marginal cost increased from $50 to $60 and the firm is a monopoly, then it would raise its price _____. If the marginal cost increased from $50 to $60 and the firm operates in a perfectly competitive market, then the market price would _____.
Read DetailsIn a perfectly competitive industry, the equilibrium price i…
In a perfectly competitive industry, the equilibrium price is $10, and the minimum average total cost of the industry’s firms is $20. If this is a constant-cost industry, we can expect that in the long run, firms will _____ the market, shifting the industry’s short-run supply curve _____.
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