26. Zlatkos and klampars are substitutes. There is an increase in the price of z

Question

26. Zlatkos and klampars are substitutes. There is an increase in the price of zlatkos. As a will happen in the market for klampars? result, what a. The demand curve will shift to the right b The supply curve will shift to the right. c. The demand curve will shift to the left. d. The supply curve will shift to the left. e. The demand and supply curves both remain unchanged. 27. Marginal revenue for good X is negative. This indicates that a. good X is an inferior good. b. the demand for good X is elastic. c the demand for good X is unit elastic. d. the demand for good X is inelastic. e. (a) and (d) are both correct. 28. Which of the following would be expected to shift the supply curve for refrigerator magnets to the left? a. An increase in the prices of inputs used in production of refrigerator magnets. b. A decrease in the price of refrigerator magnets c. Discovery of a new technology that makes it possible to produce more refrigerator magnets without using more inputs. d. All of the above. e. (a) and (b) only. Which of the following companics was/were broken up as a result of an antitrust action? a. Standard Oil b. American Tobacco c. ALCOA d. AT&T; c. All of the above 30. Ms. Jones has received a promise that she will be paid $1000, exactly three years from now. There is no uncertainty she is absolutely certain that she will receive the $1000. The rate at which Ms. Jones discounts the future is 6%, what is the present discounted value of the payment? a. $1000 b. $1000/1.06 c. $1000/1.60 d. $1000/ (1.06 e. $1000/3

Explanation / Answer

26.The correct answer is: a)

Reason: Since both are substitute. When the price of zlatkos increases, people will substitute it with klampars and as a result the demand for klampars will increase i.e the demand curve will shift to the right.

27. The correct answer is: d)

Reason: When the demand is inelastic, any further increase in output will yield a negative MR.

28.The correct answer is: a)

Reason: An increase in the price of input will increase the cost of production and thereby a decrease in the supply i.e. the supply curve will shift leftward.

29.The correct answer is: e)

Reason: This goes by historical evidence.

30.The correct answer is: d)

Reason: Present value is equal to the discounted value of 1000 received after 3 years i.e 1000/(1.06^3).

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