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Author Question: Labor is typically assumed to be the only variable input in very short-run production systems, and ... (Read 86 times)

hbsimmons88

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on: Jul 1, 2018
Labor is typically assumed to be the only variable input in very short-run production systems, and the number of variable inputs increases as we lengthen our planning horizon from short run to long run.
 
  What happens to the labor demand curve as we move from short run to long run? A) Demand curve becomes less elastic
  B) Demand curve elasticity does not change
  C) Demand curve becomes more elastic
  D) Demand curve becomes upward sloping

Question 2

Albatross Software has two main products: WindSong is a program that can be used to edit audio files and SunBurst is a program that can be used to edit digital photos. The two major types of customers are small businesses and home users.
 
  The small business customers have a reservation price of 300 for WindSong and 450 for SunBurst. The home users have a reservation price of 100 for WindSong and 125 for SunBurst. Which of the following statements is true? A) Bundling the two software products is not likely to be profitable because the marginal cost of producing software is positive by very small.
  B) Bundling the two software products is not likely to be profitable because the consumer demands are homogeneous.
  C) Bundling the two software products is likely to be profitable because the demands are negatively correlated.
  D) Bundling the two software products is not likely to be profitable because the demands are positively correlated.


aadams68

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Reply #1 on: Jul 1, 2018
Answer to Question 1

C

Answer to Question 2

D


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