Learning by doing is represented by A) a decrease in the average total cost curve. B) an increase in the average total cost curve. C) no change in the average total cost curve. D) an increase in the average total cost curve and a decrease in the marginal cost curve. ANSWER A
Date: September 9th, 2020
For a monopoly, marginal revenue is less than price because A) the demand for the firm’s output is downward sloping. B) the firm has no supply curve. C) the firm can sell all of its output at any price. D) the demand for the firm’s output is perfectly elastic. ANSWER A
Date: September 9th, 2020
Short-run average cost exceeds long-run average cost only when there are economies of scale. Indicate whether the statement is true or false ANSWER False. Short-run average costs exceed long-run average costs because the firm is locked into a certain input mix in the short run that may not be cost minimizing when all inputs […]
Date: September 9th, 2020
Marginal Revenue is A) the increase in total revenue from selling one more unit of output. B) equal to P(1+1/ε). C) equal to P when the price elasticity of demand is infinite. D) All of the above. ANSWER D
Date: September 9th, 2020
If a market is controlled by one perfect price discriminator who is able to charge each consumer the highest price that consumer is willing to pay, the seller will produce output until the price paid by the last consumer is equal to the marginal cost of making the good. That is, the price of the […]
Date: September 9th, 2020
Explain how a firm can have constant returns to scale in production and economies of scale in cost. What will be an ideal response? ANSWER A firm can have constant returns to scale in production at every output level. If the firm doubled all inputs the output would double. However, the firm may also […]
Date: September 9th, 2020
A social welfare function (SWF) A) depicts the preferences of the president of the country. B) combines various consumers’ utilities to provide a collective ranking of allocations. C) indicates the choices that are acceptable by most consumers. D) is the outcome of a majority voting decision rule. ANSWER B
Date: September 9th, 2020
If society were to maximize the utility of its best-off member, the final allocation would be A) perfect equity. B) on the contract curve. C) Pareto efficient. D) one in which one person gets everything. ANSWER D
Date: September 9th, 2020
If government chooses a policy that does not lead to a Pareto improvement, one may say that A) this policy creates only winners. B) this policy creates winners and losers. C) only poor people benefit from this policy. D) this policy only creates losers. ANSWER B
Date: September 9th, 2020
In the long run, the expansion path is A) horizontal. B) vertical. C) diagonal. D) Not enough information. ANSWER D
Date: September 9th, 2020
