Strawberries, a Normal Good, Are Produced in a Perfectly Competitive

question 63

Multiple Choice

Strawberries, a normal good, are produced in a perfectly competitive market. Average consumer incomes increase. This will cause the individual strawberry farmerʹs marginal revenue to ________ and their profit-maximizing level of output to ________.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Surplus Material

Materials that exceed the requirements of the production process, often resulting in excess inventory.

Purchased Lots

Refers to the buying of assets or commodities in bulk quantities, often for manufacturing or resale purposes.

Relevant Cost

Costs that differ between alternatives in a decision-making process, and therefore, should be considered when evaluating those alternatives.

Avoidable Costs

Expenses that can be eliminated if a particular decision is made, such as discontinuing a product or service.