1. Farmers in certain areas of U.S. CAN GROW EITHER WHEAT OR CORN. IF THE price of corn increases the:

A. supply of wheat will shift to the right

B. supply of wheat will shift to the left

C. supply of both corn and wheat will shift, but in opposite direction.

D. supply of corn will shift to the right.

2. The production function Q= 0.25X 0.5Y exhibits:

A. constant returns to scale.

B. increasing returns to scale.

C. increasing and then diminishing returns to scale.

D. diminishing returns to scale.

3. The percentage change in profit that results from a 1% change in units sold equals:

A. the cost elasticity

B. the returns to scope economics

C. marginal profit

D. the degree of operating leverage.

4. A monopolist maximizes profits by producing a level of output where.

A. P = AC.

B. P > MC.

C. P < MC.

D. P = MC.