Economics - Study Mode

[#411] If marginal opportunity cost is falling, the PPF would be
Correct Answer

(D) Convex

Explanation

Solution: If marginal opportunity cost is falling, the PPF would be convex. Pay Per Click curve can be convex to the origin when the opportunity cost decreases. This can happen only when less and less units are foregone of first commodity for the introduction of additional unit of another commodity. Due to increasing marginal opportunity cost. PPC becomes concave to origin.

[#412] Calculate the income elasticity for a household when the income of this household rises by 5% and the demand for buttons does not change at all.
Correct Answer

(C) Zero

Explanation

Solution: The income elasticity for a household is Zero when the income of this household rises by 5% and the demand for buttons does not change at all.

[#413] MC curve cuts ______ curves at their minimum points
Correct Answer

(A) AVC and AC

Explanation

Solution: MC curve cuts AVC and AC curves at their minimum points. As long as MC is less than ATC, ATC will go down with each extra unit made. At some point, MC rises to the point that it equals ATC and the curves intersect.

[#414] In perfect competition, in the long run, there will be
Correct Answer

(A) Normal profits

Explanation

Solution: In perfect competition, in the long run, there will be Normal profits. Perfect Competition Long Run equilibrium results in all firms receiving normal profits or zero economic profits.

[#415] When the decrease in the price of one good causes the demand for another good to decrease, the goods are
Correct Answer

(D) substitutes