Price of Oil = %3D Barrels of Oil Marginal Revenue SO Marginal Cost SO Change in Profit $20 $40 S60 $80 S100 $100 $100 $100 $100 $100 $100 $100 2 3 4 $120 -$40

3. (*4") At nine units of output (Q=9), Average Variable Cost is (AVC=) $15 and Average Fixed Cost is (AFC=) $10. At ten units of output (Q=10), Average Variable Cost is (AVc=) $16 and Average Fixed Cost is (AFC=) $9. The Marginal Cost of the tenth unit of output is (MC-): A. $10. B. $1. C. Not available with the information provided. D. $25. O E S-1.

19. (Catalogue companies are the classic example of perfectly inflexible prices because once they print and ship out their catalogues, they are committed to selling at the prices printed in their catalogues. If a catalogue company finds its inventory of sweaters rising, what does that tell you about the demand for sweaters? If the inventories are rising for sweaters we know that demand for sweaters must be increasing, falling ). This is because prices are fixed, so this implies that people are buying less of the good due to a . increase, decrease ) in demand (see Figure 6.1b). In most circumstances, this accumulation of inventories suggests that the demand for sweaters was unexpectedly, high, unexpectedly low, as expected ) since companies try to smooth out production to minimize costs. If the company could change the price of sweaters, it would (raise the price, lower the price, keep the price the same ). Given that the company cannot change the price of sweaters, consider the number…

9 The cereal has only two listed ingredients: wheat and a preservative. The retail price is C$4.50 for 400 grams. It is interesting to note that at C$10/bu for wheat, there is about a dime’s worth of wheat in the bag. The remaining C$4.40 per 400 grams covers all the returns, including to the grocer, associated with all the value-added activity occurring between the farm gate and the final consumer. Provide a clear explanation of how puffed wheat cereal is an imported product in a wheat exporting region