Please help me with the logic behind 7 & 10. I cannot say the answers are right.
ID: 1120130 • Letter: P
Question
Please help me with the logic behind 7 & 10. I cannot say the answers are right.
gives the greatest total utility per dollar 7. If goods A and B are substitutes and thel pricg of good A increases, which of the following are true? Circle all that apply a. Quantity demanded of B increases Consumer surplus derived from good A decreases Marginal utility of good A decreases Producer surplus of firms producing good B decreases d. 8. Which of the following will not cause an increase in the demand for peanut butter, a normal good? a. The price of jelly decreases b. Consurher income increases c) Peanut plants begin to yield more peanuts A government report claims that peanut consumption reduces the risk of cavities 9. What is the type of auction where the price starts low and increases until only one person is willing to pay that price? a. First price auction b. Second price auction English auction d. Dutch auction 0.Suppose the market for corn is perfectly competitive with 150 firms and initially in equilibrium. If the workers at lowa Com Company (C firms remain non-unionized), which of the following is true long run C)unionize Ybut workers at other com a. ICC will make a profit in the short run. b. Other firms will exit in the long run. c. ICC will sell more corn in the short run. ICC will exit in the long run. e. Other firms will charge a price greater than marginal cost.Explanation / Answer
7) The answer is A, B and C.
because the subsitute goods are those good which positive cross elasticity of demand or in general terms, the quantity demanded of good increase if its subsitute good price has increased. so, when price of good A increase, then people switch to good B and hence quantity demanded for good B increase. and people who still buy good A, their consumer surplus has been decreases because now they have to pay higher price for the same good. and as the price of good increase, the marginal utility derived from good A also decreases.
10) The asnwer is D -) ICC will exit in the long run .
because, the marker is in long run equilbruim .therefore firms are earning economic profit and price is equal to marginal cost. when the worker of icc unionize, then wage will increase and hence the marginal cost will also increase . this will result in loss to the firm in the long run and hence firm will exit.
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