Author Question: If a potato farmer expands output, he finds that the increase in total revenue is less than the ... (Read 65 times)

jjjetplane · **on:** Jun 30, 2018

If a potato farmer expands output, he finds that the increase in total revenue is less than the increase in total costs. This means that:
a. profit is being maximized.
b. he should not have expanded output.
c. he should produce even more output.
d. the firm is wasting resources.
e. the farmer should go out of business.

Question 2

There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is 1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50 . It would make sense that:
a. Z and X are complements; Y and X are substitutes.
b. Y and X are substitutes; Y is complementary to Z.
c. X and Z are unrelated; Y is complementary to X.
d. X and Z are complements; Y and Z are substitutes.