Question 1:There is a difference between Accounting Profit and Economic Profit. What iseconomic profit? Do you think that the economic profit increase when more firms enter an industry?
Question 2:If tea and coffee are substitutes and both are normal goods, what would happen to the consumption of tea and coffee if:
a. the price of tea increased.
b. consumer incomes increased.
Question 3:What is Consumer Surplus? How the “Deadweight loss” is created in the market?
Question 4:When the price of rice was “low,” consumers in Thailand spent a total of $8 billion annually on its consumption. When the price halved, consumer expenditures actually DECREASED to $6 billion annually. What does this indicate: the demand for rice is elastic or the demand for rice is inelastic?
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