As the price of fresh grapes (a substitute in production for wine) decreases, ceteris paribus: A. the supply of wine will decrease. B. the supply of wine will increase. C. the demand for wine will decrease. D. the demand for wine will increase. E. the supply of wine will be unaffected.

/in /by

As the price of fresh grapes (a substitute in production for wine) decreases, ceteris paribus:
A. the supply of wine will decrease.
B. the supply of wine will increase.
C. the demand for wine will decrease.
D. the demand for wine will increase.
E. the supply of wine will be unaffected.

You might also like
State the Walras’ law and demonstrate that the value of aggregate excess demand is zero for all prices.
Derive the contract curve in an exchange economy where there are two traders with utility functions: Trader A: U A = X A 0.5 Y A 0.5 Trader B: U B = X B 0.5 Y B 0.5 Between the traders they own 50 units of good X and 100 units of good Y.
What are the advantages and disadvantages of a Monopoly?
Your community newspaper, The Xpress, has fixed production costs of K70 per edition, and marginal printing and distribution costs of 40n/copy. The Xpress sells for 50n/copy a) Write down the associated cost, revenue, and profit functions. (6 marks) b) What profit (or loss) results from the sale of 500 copies of The Xpress? (2 marks) c) How many copies should be sold in order to break even?
MRS of X for Y refers to the amount of Y the consumer is willing to give up in order to gain one additional unit of X (and still remain in the same indifference curve!) Exercise 1 Draw the indifference curve using the data in the table at the left. Calculate and check that MRS mentioned in the table are correct. Is the MRSxy a decreasing function in X?
Suppose that the firm output is given by q=aLK2 specify the marginal products of labour and capital
A firm is employing 100 units of labour and 50 units of capital to produce 200 widgets. Labour costs $10 per unit and capital $5 per unit. For the quantities of inputs employed, MP L = 2 and MP K = 5. In this situation, the firm (A) is producing the maximum output possible given the prices and relative productivities of the inputs. (B) could lower its production costs by using more labour and less capital. (C) could increase its output at no extra cost by using more capital and less labour. (D) should use more of both inputs in equal proportions.
Suppose a firm finds that the marginal product of capital is 60 and the marginal product of labor is 20. If the price of capital is $6 and the price of labor is $2.50, describe how the firm should adjust its mix of capital and labor? What will be the result?