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:
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.

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 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.

Explanation:
Choice D is not relevant to the choice architect as it is personalized and differs from each individual consumer to the next.

Choice architecture shapes decision-making through the presentation and structure of choices. It includes default choice, where a pre-selected option is favored if no active decision is made (Choice A), mandated choice which requires active selection (Choice B), and restricted choice which narrows down options (Choice C).

Explanation:
All three statements can be true of a free-market economy. Resources are owned, controlled and managed by private individuals. Income distribution is unequal as the factors are paid on the basis of productivity.

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.

• 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.

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.

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:
Demand for cigarettes is likely to be inelastic because of their addictive and habit-forming nature, so most of the tax burden will likely be shifted to consumers in the form of higher prices.

Choices A, B and C are all possible outcomes of high indirect taxes on cigarettes.

Explanation:
Primary commodities tend to have price-inelastic supply because they take time to grow or extract. Producers of manufactured products can build up an inventory of products while waiting for prices to rise, making supply price-elastic.

Choices A, B, and C confuse the determinants of PES with the determinants of PED.

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

A

Explanation:
If quantity demanded changes by a greater percentage than an increase of income, it signifies that a good is a luxury good to that consumer.

On the Engel curve above, this relationship occurs when the slope of the curve is greater than 45$°$, so Choice A is an income elastic, or luxury, good.

Points B, C, and D are not luxury goods because they have slopes less than 45°.

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:
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

Explanation:
The diagram shows an increase of quantity supplied, which is a movement along the supply curve, not a shift. An increase in quantity supplied is caused by an increase in demand.

Choices A, B, and D are incorrect because they shift the supply curve.

• Choices A and D shift the supply curve to the left
• Choice B shifts the supply curve to the right.

Explanation:
Allocative efficiency occurs when the market is in equilibrium. Consumer surplus is the triangle created by the demand curve, the price, and the vertical axis.

Therefore, if the market is allocatively efficient, the price is $12 and the consumer surplus is the area of the green triangle:

[(26−12) × 13]/2=$91

The following answers are incorrect because they refer to:

• (Choice A) consumer spending ($12\times 13$) when the price is $\text{\$}$12
• (Choice B) consumer surplus when the price is $\text{\$}$8
• (Choice D) producer surplus

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:
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.