If the farm adopted a new technology, which allows it to use fewer resources to fatten chickens, explain how the farm's production possibilities will change. Explain how the opportunity cost of producing a bushel of soybean will be affected
What will be an ideal response?
The farm's PPF rotates outward; the maximum quantity of soy-beans (500 bushels) does not change but the maximum quantity of chicken increases. The opportunity cost of a bushel of soybeans increases because more chicken must be given up to produce additional soybeans.
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Suppose Spam is an inferior good. If the U.S. economy is growing strong, and demanders' incomes were to rise, which of the following would tend to occur?
A) Spam sales would increase. B) Spam demand would decrease. C) The price of Spam would increase. D) Both A and C above. E) Both B and C above.
A firm will increase its spending on advertising until
A) it has monopolized the market. B) it has deterred all future entry. C) the marginal benefit of advertising is zero. D) the marginal benefit of advertising equals the marginal cost of advertising.