If widgets are a Giffen good, which of the following describes the effect of a price decrease in widgets? Quantity demanded will most likely.
A. Increase in accordance with the law of demand.
B. Decrease because a lower price makes a Giffen good less desirable.
C. Decrease because the income effect will more than offset the substitution effect.
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The demand function for coffee pots is given by 250-5P, and the supply function is given by 20P-50. At a price of 15, the market:
A. Has excess supply of 75.
B. Has excess demand of 75.
C. Is in equilibrium with quantity supplied and demanded equal to 75.
A monopolist will expand production until MR = MC and charge a price determined by the:
A. Demand curve.
B. Marginal cost curve.
C. Average total cost curve.
A change in the supply of bread is least likely to result from a change in:
A. Wages for bakers.
B. The price of bread.
C. The price of wheat.
In which market structure(s) can a firms supply function be described as its marginal cost curve above its average variable cost curve?
A. Oligopoly or monopoly.
B. Perfect competition only.
C. Perfect competition or monopolistic competition.