The tangency points between the long-run average cost curve (LRAC) and the short-run average cost curves (SRAC) are A) always at the minimum of the SRACs. B) never at the downward portion of the SRACs. C) always at the maximum of the SRACs. D) not necessarily at the minimum of the SRACs. ANSWER D […]
Date: September 9th, 2020
Many universities have either a top football program OR a top basketball program. Very few have both. These results suggest the presence of A) economies of scope. B) diseconomies of scope. C) returns to scale. D) the law of diminishing marginal returns. ANSWER B
Date: September 9th, 2020
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
Which of the following statements best explains why long-run average cost is never greater than short-run average cost? A) In the long run, tangency of the isocost and isoquant is attainable. This is not necessarily true in the short run. B) In the long run, diseconomies of scale might not occur, but in the short […]
Date: September 9th, 2020
The Arrow impossibility theorem suggests A) democracies are doomed to fail in the long run. B) dictatorships are impossible in the long run. C) there is no universally applicable decision rule in a majority-rule democracy. D) there is no way to make democracy better than a dictatorship. ANSWER C
Date: September 9th, 2020
Suppose the production function is q = 12 L0.25K0.75. Determine the long-run capital-to-labor ratio (K/L) if the cost a unit of capital (r) is three times the cost of a unit of labor (w). What will be an ideal response? ANSWER The firm minimizes costs by setting MRTS = w/r. MRTS = MPL /MPLK […]
Date: September 9th, 2020
Equity and efficiency can be achieved simultaneously through competition. Indicate whether the statement is true or false ANSWER False. Equity involves value judgments and achieving it will usually result in lessened efficiency.
Date: September 9th, 2020
Most of the debates in the U.S. Congress center on A) efficiency concerns. B) equity concerns. C) both efficiency and equity equally. D) market inefficiency. ANSWER B
Date: September 9th, 2020
