If current output is less than the profit-maximizing output, which must be true? A) Total revenue is less than total cost. B) Average revenue is less than average cost. C) Average revenue is greater than average cost. D) Marginal revenue is less than marginal cost. E) Marginal revenue is greater than marginal cost. ANSWER […]
Which of the following is true for the game in Scenario 13.3? A) Moto’s dominant strategy is the CD changer. B) Moto’s dominant strategy is the free maintenance. C) Zport’s dominant strategy is the low-profile tires. D) Zport’s dominant strategy is the sun roof. E) Neither company has a dominant strategy. ANSWER C
Consider a good whose own price elasticity of demand is -0.5 and price elasticity of supply is 1.5. The fraction of a specific tax that will be passed through to consumers is ________. A) 0 B) 0.25 C) 0.5 D) 0.75 E) 1 ANSWER D
Marginal product crosses the horizontal axis (is equal to zero) at the point where A) average product is maximized. B) total product is maximized. C) diminishing returns set in. D) output per worker reaches a maximum. E) All of the above are true. ANSWER B
Consider a market in which high-quality and low-quality television sets are sold. Before consumers make a purchase, they do not know the quality of the sets, but the sellers do know. As compared to a situation where both consumers and sellers know the quality of the sets, this situation would A) cause no change in […]
Pressure to redistribute the economic pie is strong when the economy is booming. Indicate whether the statement is true or false ANSWER F
Suppose the federal government allows labor unions to act as the sole seller in labor markets, but the government collects a $1 per hour fee to cover unemployment insurance for each union worker. Assuming this fee is not so large that it forces the unions to disband, what is the impact of this fee on […]
Externalities can lead to inefficient economic outcomes because: A) firms do not have to pay the full cost associated with using inputs that cause pollution. B) firms that produce public goods tend to be monopolies. C) Both A and B are correct. D) none of the above ANSWER A
Although digital storage costs have declined sharply in the past few years, many universities and companies still have limited storage space for email messages and impose a fixed limit on the amount of file storage space per user. May we view this as a common property resource problem, and do the fixed limits resolve the […]
The Malthusian dilemma relates to marginal product in that A) starvation can be averted only if marginal product is constant. B) because of diminishing marginal product, the amount of food produced by each additional member of the population increases. C) because of diminishing marginal product, the amount of food produced by each additional member of […]
