The demand for a product produced by a union becomes more elastic. After this change, how does an increase in the wage rate paid its members affect their employment?
A) It does not decrease employment at all.
B) It decreases employment by less than it would have before.
C) It decreases employment by more than it would have before.
D) It increases employment.
C
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Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________
A) decreases; negative B) increases; negative C) increases; positive D) decreases; positive
Refer to Figure 12-5. If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?
A) Only the average variable cost and average total cost curves shift upward; marginal cost is not affected. B) All the cost curves shift upward. C) Only the average total cost curve shifts upward; the marginal cost and average variable cost curves are not affected. D) None of the curves shifts; only the fixed cost curve, which is not shown here, is affected.