Table 5.3 -Refer to Table 5.3.The Table Above Lists the Marginal Cost

question 128

Multiple Choice

Table 5.3
-Refer to Table 5.3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specialises in producing fancy dress costumes.If the price of cowboy hats increases from $38 to $46,

• A)consumers will buy no cowboy hats.
• B)the marginal cost of producing the third cowboy hat will increase to $46.
• C)producer surplus will rise from $22 to $46.
• D)there will be a surplus of cowboy hats.

---

Definitions:

Drawer

In the context of negotiable instruments, this term refers to the party that creates or writes a check or a draft, instructing the drawee (usually a bank) to pay the specified amount to a third party (the payee).

Drawee

The party directed by a drafter (such as in the case of a cheque) to pay a certain amount of money to a third party.

Negotiability

Negotiability refers to the feature of certain documents, such as negotiable instruments, that allows them to be transferred or endorsed from one party to another, thereby guaranteeing payment to the holder.

Payable on Demand

A term indicating that a payment must be made by the debtor immediately upon the creditor's request.