Suppose We Observe a Decrease in the Equilibrium Price of Tuna

question 130

Multiple Choice

Suppose we observe a decrease in the equilibrium price of tuna and an increase in the equilibrium quantity of tuna. This is best explained by:

• A)a decrease in the cost of fuel used by tuna fishing boats.
• B)a decrease in the tuna population in the oceans.
• C)a decrease in the expected future price of tuna.
• D)an increase in the price of salmon, a substitute for tuna.

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Definitions:

Diseconomies of Scale

A situation in which a business's costs per unit increase as the scale of operation expands, opposite to economies of scale.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of output.

Long Run

A period during which all inputs, including capital and labor, can be adjusted by firms. It is characterized by the flexibility of adjusting to conditions without any fixed constraints.

Average Costs

It's the cost associated with producing each unit, found by dividing the entire production expenses by the number of units produced.