A recent article suggests that the introduction of the new iPhone 6 increased the demand for iPhone protective cases. The article suggests that these two goods are
A) substitutes and their indifference curves are close to being straight lines.
B) complements and their indifference curves are close to being straight lines.
C) substitutes and their indifference curves are close to being L shaped.
D) complements and their indifference curves are close to being L shaped.
Ques. 2The water and diamonds paradox of value results from
A) the concept of deadweight loss.
B) the law of demand.
C) diminishing marginal utility.
D) the elasticity of demand.
Ques. 3The above table shows the marginal benefits and costs from production of fertilizer. There are no external benefits. If the market is perfectly competitive and unregulated, at the equilibrium output, the
A) marginal private cost exceeds the marginal private benefit.
B) marginal private cost is less than the marginal private benefit.
C) marginal social cost equals the marginal private benefit.
D) marginal social cost is greater than the marginal private benefit.
Ques. 4In the long run, if firms in a perfectly competitive market are incurring economic losses, then
A) new firms will enter the market and the price will rise.
B) some firms will leave the market and the price will fall.
C) some firms will leave the market and the price will rise.
D) new firms will enter the market and the price will fall.
Ques. 5How does the elasticity of demand for labor affect the deadweight loss from an increase in the minimum wage? Why?
What will be an ideal response?
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