Explanation:

Choice I is incorrect: the number of substitutes for oil relates to PED, not PES

Choice II is correct: the time needed to adjust oil production inputs means that oil production does not respond to changes in price, thus making oil’s PES more inelastic

Choice III is incorrect: the cost of production is not a factor affecting PES

Choice IV is incorrect: a product being a necessity relates to PED, not PES

Explanation:
Statement I: In the short run, one or more factors of production are fixed. The long run is defined as the amount of time that needs to pass in order for all factors of production to be changeable.

Statement II: The marginal product curve intercepts the average product curve (AP) at the highest point of AP.

Statement III: Marginal Cost = ΔTC/Δq

Explanation:
Corporate social responsibility (CSR) refers to a company's commitment to conducting its business in a manner that supports society's values. For example, a firm may consider the impact of its operations on various stakeholders (employees, customers, communities) or the environment.

CSR involves integrating social and environmental concerns into the company's decision-making processes and pursuing initiatives that contribute to sustainable development. In the example above, the company integrates a social concern into its decision-making processes.

Choices A, C, and D are other examples of alternative business objectives but they are not relevant in this scenario.

Explanation:
I: This describes what is happening in the diagram. When price decreases, quantity demanded increases as expressed by a movement along the demand curve.

II: This does not describe what is happening in the diagram, as an increase in demand refers to a shift of the demand curve, not a movement along it.

III: The substitution effect is one of the reasons why the demand curve is downward-sloping.

Explanation:
Profit maximising conditions are:
(i) MR = MC
(ii) MC should rise after the point of equilibrium

Options A, B, and D are incorrect

• Option A: as the second condition is not met.
• Options B and D: as neither condition is met

Key ideas:

• A decrease in demand refers to a leftward shift of the demand curve.
• Only non-price determinants of demand can shift the demand curve.

Explanation:
B is correct, as petrol and cars are complementary goods. If the price of petrol goes up, fewer people will want to buy cars (used or otherwise).

Choice A is incorrect because a rise in the price of used cars would cause a decrease of quantity demanded—a movement along the demand curve—not a shift of the demand curve.

Choices C and D are both incorrect as public transit and new cars are substitutes for used cars. Therefore, a growing distaste for public transit and a rise in price for new cars should both increase demand for used cars.

Explanation:
Bounded rationality, in the context of behavioral economics, refers to the idea that human decision-making is limited by cognitive constraints, such as information overload, time limitations, and cognitive biases.

It suggests that individuals do not always make fully rational decisions as assumed by classical economic theory, but instead make choices that are satisfactory or "good enough" given the constraints they face.

Choices A and D are also examples of the limitations of the theory of rational consumer choice, but they are not relevant in this scenario.

Choice B is an assumption supporting the theory of rational consumer choice.

Key idea:

• Bounded rationality means that consumers behave in a rational manner only within limits.

Explanation:
Statement I is incorrect because maximising utility is a characteristic of a perfectly rational consumer.

Statement II is correct because a consumer is behaving rationally only within limits, so instead of maximising utility, consumers satisfice.

Statement III is correct because consumers cannot process all information to behave in a rational manner.

Statement IV is incorrect because consumers typically have insufficient information.

Explanation:
Statement I is incorrect: if a competing firm increases its hours, that firm is more competitive with the original firm—PED for the original firm increases.

Statement II is correct: if a competing firm begins to focus on other customers (offices), that firm is less competitive with the original firm—PED for the original firm decreases.

Statement III is correct: if the incomes of potential customers increase, the price of home cleaning will be a smaller proportion of income—PED for the service decreases.

Explanation:
P1 shows the equilibrium price, or market price, for the good in the diagram, so Choice C is a true statement.

Market forces determine the equilibrium price:

• Choice A is true: the supply curve shows the marginal cost to producers of producing an additional good.
• Choice B is true: the demand curve shows the additional, or marginal, benefit consumers receive from consuming an additional good.

Choice D is an incorrect statement because P1 is not the opportunity cost of Q1. The opportunity cost of Q1 is the next best choice: that choice's marginal benefit is less than P1.

• Income elasticity of demand = [percent change of quantity demanded]/[percent change of income change]

Explanation:
Applying the YED values of the goods to the formula for YED shows that a decrease in income decreases demand for goods with positive YED values and increases demand for goods with negative YED values.

Choice D is correct: demand for widgets increases, but demand for gizmos and whatsits decreases. To reflect changes in demand, Firm A should produce more widgets and fewer gizmos and whatsits.

Choices A, B, and C are incorrect: the demand for gizmos and whatsits has decreased, so Firm A should not produce more of these products.

Explanation:
Satisficing is followed when there is bounded rationality.

Options A, C, and D are assumptions of rational consumer choice

Option A: as the consumer can make a rational choice only if perfect information about the products is available.

Option C: as a consumer always prefers to have more of a good rather than less of it.

Option D: a rational consumer buys a combination of goods within a given money limit that maximises his utility.

Explanation:
The ability to store a product affects its PES. Perishable products have lower PES, and durable products have higher PES.

Choices B, C, and D are all determinants of price elasticity of demand (PED), not PES.

Explanation:

Canned corn and corn-based ethanol are in competitive supply. If demand for corn-based ethanol increases, more corn will be allocated toward producing that instead of canned corn, causing the supply of canned corn to fall. Also, falling incomes will cause demand for canned corn to fall.

Explanation:
A vertical supply curve indicates that supply is perfectly inelastic, meaning quantity supplied is fixed, and supply does not respond at all to changes in price. In this case, PES = 0. The number of tickets at a sporting event will likely be fixed as the stadium will have a fixed number of seats and a maximum capacity.

Choices A and B represent products that are likely to have relatively price-elastic supply as they can be stored.

Choice D represents a product that is likely to have relatively price-inelastic supply due to the time it takes to extract, refine and process oil.

Explanation:

The effect of a price change varies depending on the original price. A US $\text{\$}$1 decrease is 20$\%$ of an original price of US $\text{\$}$5, but the same decrease is 50$\%$ of an original price of US $\text{\$}$2. Similarly, increasing quantity demanded (QD) by 10 has a greater impact when the original quantity is smaller.

As a result, PED decreases when moving down a straight-line demand curve.

Incorrect choices:

• (Choice A) Total revenue (TR) is maximised at the midpoint of the demand curve. Lowering the price below the midpoint reduces TR.
• (Choice B) Changing the price causes a movement along the demand curve, not a shift of the demand curve.
• (Choice D) Lowering the price of a product increases QDQD, so the demand curve for complementary goods shifts rightward.

Option A: any amount of profit allows management to distribute dividends, so it need not profit maximise.
Options B and C: pursuing growth or CSR goals can keep a firm from being profitable, especially in the short run.

Explanation:
Bounded self-control is the idea that individuals, even when they know what they want, may not be able to act in their own interests. Other examples of bounded self-control include evidence of procrastination, and submitting to temptation.

Although choices A, C, and D are examples of the limitations of the assumptions of rational consumer choice, they are not relevant to the phenomenon of impulse buying.

Key idea:

• Non-price determinants of demand shift the demand curve.

Explanation:

A rise in the price of orange juice would decrease the quantity demanded of orange juice. As the overall demand for juice does not change, this causes an increase in demand for apple juice, as apple juice and orange juice are substitutes.

Choice A is wrong because apples are an input in the production of apple juice, so a rise in the price of apples would shift the supply curve, not the demand curve.

Choices C and D are wrong because both a fall in incomes and the emergence of new, more popular, alternatives would shift the demand curve for apple juice leftward.

Explanation:
Statement I: A more durable product will often lead to supply being more price-elastic as producers can store inventory when prices are too low. Consequently, an increase in price causes a proportionally larger increase in quantity supplied.

Statement II: Electronics are often assembled in factories and production can be increased in a relatively short period of time.

Statement III: Availability of substitutes is a determinant of PED, not PES.

Statement IV: The degree of luxury/necessity is a determinant of PED, not PES.

Explanation:
In the 2 sector circular flow of income model, firms pay income to households because households own the factors of production.

Options A, B, and C are incorrect

• Option A: injections are not shown in the 2 sector circular flow.
• Option B money does not flow equally to all household because some factors of production are more highly valued than others.
• Option C: money flows from firms to households in the form of income for the factor services hired and from households to firms in the form of expenditures on the purchase of goods.

The correct answer is Choice A. Prices act as signals, indicating resource scarcity when prices are high, or resource abundance when prices are low.

These answer choices do not specifically address the concept of signalling in the context of the price mechanism:

• Choice B refers to the law of demand.
• Choice C refers to the “incentive” function of price.

Choice D is incorrect because the price mechanism refers to market forces—demand and supply—not government intervention.