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Unformatted text preview: Principles of Economics W1105x-1 Fall 2009 Sunil Gulati Solution Set #1 1. a. Among the factors that would influence a farmer’s choice is the expected profitability of the two crops. A farmer will grow corn rather than soybeans if he expects the profits from growing corn will be greater than those earned from growing soybeans. b. Other things being equal, as the price of soybeans falls relative to the price of corn, the supply of corn would increase. Since corn and soybeans are substitutes in production, the variable “prices of substitutes in production” is the variable that would explain the farmer’s choice. 2. Although paper is a complementary good for printers, the paper used for one model can be used with other models, too. But the same is not true for printer cartridges. In recent years as the prices of printers have declined, the cost of cartridges has become a more significant consideration for consumers who are in the market for a new printer. In 2007 the price of a black ink cartridge for the less expensive Lexmark printer was about $25 while a black ink cartridge for the Epson printer...
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This note was uploaded on 02/27/2011 for the course ECONOMICS 101 taught by Professor G during the Spring '11 term at Columbia College.
- Spring '11