Reference no: EM132825761

(1) Suppose that a NY Times article indicates that wild salmon indicates that wild salmon is a healthy food because it provides lots of omega 3 nutrients. During the same period, the number of wild salmon returning to spawn in Alaska has grown dramatically.

The combination of events listed above:

a) will unambiguously cause the equilibrium number of wild salmon caught to fall

b) will unambiguously cause the equilibrium number of wild salmon caught to rise

c) may cause the equilibrium number of wild salmon caught to rise or fall

d) will have no impact on the equilibrium number of wild salmon

(2) Suppose that a NY Times article indicates that wild salmon indicates that wild salmon is a healthy food because it provides lots of omega 3 nutrients. During the same period, the number of wild salmon returning to spawn in Alaska has grown dramatically.

The combination of events listed above:

a) will unambiguously cause the equilibrium number of wild salmon caught to fall

b) will unambiguously cause the equilibrium number of wild salmon caught to rise

c) may cause the equilibrium number of wild salmon caught to rise or fall

d) will have no impact on the equilibrium number of wild salmon

(3) Suppose that a NY Times article indicates that wild salmon indicates that wild salmon is a healthy food because it provides lots of omega 3 nutrients. During the same period, the number of wild salmon returning to spawn in Alaska has grown dramatically.
Now suppose that an entrepreneur finds a way to raise salmon at a much lower cost than had previously been the case. Assume that most consumers believe that wild salmon and domestic salmon are similar products. This technological change:

a) will unambiguously raise the equilibrium price of wild salmon
b) will unambiguously lower the equilibrium price of wild salmon
c) will have no impact on the equilibrium price of wild salmon
d) may cause the equilibrium price of wild salmon to rise, fall, or remain the same

4) Suppose that a NY Times article indicates that wild salmon indicates that wild salmon is a healthy food because it provides lots of omega 3 nutrients. During the same period, the number of wild salmon returning to spawn in Alaska has grown dramatically.
Now suppose that an entrepreneur finds a way to raise salmon at a much lower cost than had previously been the case. Assume that most consumers believe that wild salmon and domestic salmon are similar products. This technological change:
(This is an extension of question 3, not a repeat)

a) will unambiguously cause the equilibrium quantity of wild salmon to rise
b) will unambiguously cause the equilibrium quantity of wild salmon to fall
c) will have no impact on the equilibrium quantity of wild salmon
d)may cause the equilibrium quantity of wild salmon to rise, fall, or remain the same

(5) The information on the salmon market provided in the previous four questions is no longer relevant. Instead, the next few questions deal with a restaurant owner.

A restaurant owner has just gotten the bad news that his landlord has raised the rent. However, he has looked at the financial figures and he still has a profitable business.

The increase in rent that the owner must pay:

Hint: Think in terms of the relation between revenue and cost at the margin -- and its implications for firm behavior.

a) will cause him to raise his price and reduce the number of meals that he serves
b) will cause him to lower his price in order to raise revenue
c) may cause the price he charges to rise or fall
d) will have no impact on the price that he charges or the number of customers that he serves