Julio makes wine and beer. Last year he made 20 bottles of wine and 20 cases of beer. If the price of grapes goes down (making wine cheaper to make), Julio will be able to make the same amount of wine and more beer. True or false?
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Julio makes wine and beer. Last year he made 20 bottles of wine and 20 cases of beer. If the price of grapes goes down (making wine cheaper to make), Julio will be able to make the same amount of wine and more beer.
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- As Gasoline Prices Soar, Americans Slowly Adapt As gas prices rose in March 2008, Americans drove 11 billion fewer miles than in March 2007. Realizing that prices are not going down, Americans are adapting to higher energy costs. Americans spend 3.7 percent of their disposable income on transportation fuels. How much we spend on gasoline depends on the choices we make: what car we drive, where we live, how much time we spend driving, and where we choose to go. For many people, higher energy costs mean fewer restaurant meals, deferred weekend outings with the kids, less air travel, and more time closer to home. Questions 1) List and explain the elasticities of demand that are implicitly referred to in the news clip. 2) Why, according to the news clip, is the demand for gasoline inelastic?Assuming that fish and chips are complementary products, if the price of fish rises, then the demand for chips will:Alice and Bob are both capable of producing goods X and Y. In one hour, Alice can produce one unit of each good. In the same amount of time, Bob can produce two units of each good. If Alice and Bob have access to the same amount of time, calculate the difference between the slope of Alice's PPF and the slope of Bob's PPF. (round to two decimal places if necessary)
- Charles is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Because his pool sessions are helping him swim more quickly, Charles plans to reduce by 1 hour per week the time he spends training on the bike and increase by 1 hour the time he spends in the swimming pool; however, his wife says that he should stop doing any biking and running and spend all 20 hours per week in the pool. Which basic principle of individual choice does Charles's plan illustrate that his wife's advice does not? Resources are scarce. All costs are opportunity costs. Many decisions are made on the margin. People usually exploit opportunities to make themselves better off.In economics, we have learned that related goods’ price does matter. Given the budget constraint and everything else remains the same, an individual consumer switches to relatively cheaper goods (also known as substitution effect). Often when you visit a chemist shop with your doctor’s prescription, your pharmacist may ask whether you are interested in buying a relatively cheaper drug (which is biologically equivalent to your prescribed drug) if it is available. what seems to be a problem that may arise when one switches to a cheaper drug.Answer the given question with a proper explanation and step-by-step solution. Which of the following choices correctly illustrates how changes in opportunity costs affect supply? A) A farmer produces corn and wheat. The price of wheat rises, so he shifts his resources toward wheat and the supply of wheat rises. B) A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he decides to spend more of his time fishing for oysters because he can make the same amount of money with fewer lobsters. C) A textbook for economics becomes cheaper, so more students opt to buy that particular textbook. D) Milk and cereal are complementary goods, so when the price of cereal falls, the quantity supplied of milk rises.
- The Economists Who Studied All-You-Can-Eat Buffets (The Atlantic, 27 Dec 2014)[1] Buffets are now big businesses, particularly in Las Vegas. The buffets in Vegas are no longer the dollar bargains they once were in the late 1950s. They're fancy productions with Kobe beef and king crab legs that can cost over $50. New research shows that paying that much for a buffet might actually make the food taste better. Three researchers did an all you can eat (AYCE) buffet field experiment to test whether the cost of an AYCE buffet affected how much diners enjoyed it. They conducted their research at an Italian AYCE buffet in New York, and over the course of two weeks 139 participants were either offered a flier for $8 buffet or a $4 buffet (both had the same food). Those who paid $8 rated the pizza 11 percent tastier than those who paid $4. Moreover, the latter group suffered from greater diminishing returns—each additional slice of pizza tasted worse than that of the $8 group.Because consumers purchase either Coke or Pepsi, economists call these “inferior” goods. Select one: True FalseWhich of the following choices correctly illustrates how changes in opportunity costs affect supply? Choice 1 of 4:A farmer produces corn and wheat. The price of wheat rises; so he shifts his resources towards wheat and the supply of wheat rises.Choice 2 of 4:Milk and cereal are complementary goods; so when the price of cereal falls, the quantity supplied of milk rises.Choice 3 of 4:A fisherman fishes for lobsters and oysters. The price of lobsters rises; so he decides to spend more of his time fishing for oysters because he can make the same amount of money with fewer lobsters.Choice 4 of 4:A textbook for economics becomes cheaper; so more students opt to buy that particular textbook.
- Paul, Noel, and Sandi work in a bakery where they make pies and cakes. In one day, Paul can make 5 pies or 5 cakes or any combination of these two goods that lie on the same line containing these two production points. Noel can make 30 pies or 10 cakes or any combination of these two goods that lie on the same line containing these two production points. Sandi can make 12 pies or 6 cakes or any combination of these two goods that lie on the same line containing these two production points. Assume that the production possibility frontier (PPF) of each person is a straight line. What are the opportunity costs of producing 1 pie in terms of the number of cakes for Paul, Noel, and Sandi? a. The opportunity cost of producing 1 pie for Paul is 1 cake; for Noel is one third of a cake; for Sandi is one half of a cake. b. The opportunity cost of producing 1 pie for Paul is 1 cake; for Noel is three cakes; for Sandi is one half of a cake. c. The opportunity cost of…“Owen saw that the price of peaches had gone down, and so he decided to buy more peaches.” Based on this information, what does Owen's reaction reflect? Explain.You may have observed that items such as different brands of aspirin, tomato sauce, or gasoline are typically priced the same as each other. This is particularly true when consumers can find these goods in close proximity to each other. For example, prices are often the same at gas stations that are on opposite sides of the street. Prices are also generally the same for products next to each other on the same grocery store shelf. Choose the correct fill in the blank. The aforementioned examples are goods that are likely to be substitutes or complements You would expect the value of the cross-price elasticity to be insignificant, small, or large because the opportunity cost of getting information on price is low.