1. The short-run supply curve is the
marginal cost curve above the break-even price.
average variable cost curve above the shut-down price.
marginal cost curve above the shut-down price.
average variable cost curve above the break-even price.
2. As the total output of an increasing-cost industry increases, the average cost of production: A. Increases or B. Decreases, because input prices: A. Increase or B. Decreases, and the productivity of inputs used by firms: A. Increases or B.Decreases
3.Sugar Import Ban. The sugar industry is another example of an increasing-cost industry. If the price of sugar is only 11 cents per pound, sugar production is profitable in areas with relatively low production costs, including the Caribbean, Latin America, Australia, and South Africa. At a price of 11 cents, the world supply of sugar equals the amount produced in these areas. As the price increases, sugar production becomes profitable in areas where production costs are higher, and as these areas enter the world market, the quantity of sugar supplied increases. For example, at a price of 14 cents per pound, sugar production is profitable in some countries in the European Union too. At a price of 24 cents, production is profitable even in the United States.
a. If the world price is 13 cents per pound, what areas of the world supply sugar to the world market and the United States?
The Caribbean, Latin America, Australia, South Africa, and some countries in the EU.
The Caribbean, Latin America, Australia, South Africa, and the U.S.
The Caribbean and Latin America.
The Caribbean, Latin America, Australia, and South Africa.
b. Suppose the United States bans sugar imports. You predict that the new price of sugar in the U.S. will be at least
(Enter your response to two decimal places.)
4. An increase in demand causes a large initial upward: A.Jump or B. Slide, in price, followed by a downward: A.Jump or B.Slide to the new long-run equilibrium price.