What would happen in the market for knee replacement surgery if insurance companies started to cover a smaller portion of the cost of the surgery, and fewer doctors decide to enter the field of joint replacement surgery?
A) Supply will decrease, but this will not shift the demand curve.
B) Demand will decrease and supply will increase.
C) Demand and supply will both decrease.
D) Demand will decrease, but this will not shift the supply curve.
C
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The average return for supplying entrepreneurial ability is the entrepreneur's
A) accounting profit. B) normal profit. C) explicit profit. D) economic profit.
Sam has preferences for weekly Video Games (V) and Sodas (S) described by the utility function U(V,S) = V2S2. Suppose the prices are denoted by pV and pS and Sam has income given by I
Assume that in Sam's optimal bundle, he consumes strictly positive quantities of both goods. a. Write out Sam's optimization problem and the associated Lagrangian expression. b. Compute the three critical value (first-order) conditions from the Lagrangian. c. Using your answer to b, find the expression for the optimal bundles as functions of the prices and income.