Question

Which of the following will result in a higher price of orange juice?

-demand for orange juice and supply of orange juice both increase

-demand for orange juice decreases and supply of orange juice increases

-demand for orange juice increases and the price of oranges increases

-demand for orange juice decreases and the price of oranges decrease

2. In economic theory, the cost of something is

-the dollar amount of obtaining it

-what you give up to get it

-usually less than the dollar amount of obtaining it

-always measured in units of time given up to get it

3. Economic theory suggests that a rational individual takes an action if

-the average benefit is greater than the average cost

-the marginal cost of doing so is greater than the marginal benefit

-the marginal benefit of doing so is greater than the marginal cost

-the marginal benefit is greater than both the average cost and the marginal cost

Answer 1

1) Answer is B.

Price has a positive relationship with supply and negative relationship with demand. So higher price means decrease in demand and increase in supply.

2) Answer is B. What you give up to get it or the opportunity cost of something.

3) Answer is C.

Consumer will purchase when marginal benefits are higher than marginal cost and he will purchase until marginal benefit and marginal cost of last unit become equal.

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