If the price of an input falls, a firm would increase the use of that input for two reasons:
a. The input is now more productive, and the firm can substitute this input for other relatively more expensive inputs.
b. The input is now more productive, and overall production costs are now lower, meaning a firm may choose to increase production.
c. Overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs.
d. Overall production costs are now lower and the firm will have more of other inputs to use with the one in question.
c
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The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized when
A) trade occurs and resources are reallocated within the two countries. B) the two countries continue to produce the same quantities of wheat and coffee. C) each country has an absolute advantage in one of the two commodities. D) the demand curves in both countries shift inward.
A price ceiling ________
A) makes it illegal to charge a higher price than the specified price B) is more effective when it is higher C) is necessary to maintain market equilibrium D) occurs in housing markets only