Suppose an economy produces milk and honey, and milk is plotted along the horizontal axis of the production possibilities frontier. The MRT is 2 at the current point of production
If the amount of milk produced is reduced by two units in order to produce one more unit of honey, then: A) the new point of production lies above the production possibilities frontier.
B) the new point of production lies on the production possibilities frontier.
C) the new point of production lies below the production possibilities frontier.
D) we cannot determine where the new point of production lies relative to the production possibilities frontier.
C
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If a market reflects a shortage and prices are allowed to move:
A) supply will increase. B) demand will decrease. C) price will decrease. D) price will increase.
In order to be able to price discriminate and maximize profit, a monopolist must be able to do all of the following EXCEPT
A) identify and separate different buyer types. B) sell a product that cannot be resold. C) identify competitors. D) determine the output where marginal revenue equals marginal cost.