At the current level of output, a firm’s marginal cost equals 16 and marginal revenue equals 10. The firm A) is producing the profit-maximizing amount. B) should produce more. C) should produce less. D) Not enough information. ANSWER C
Date: September 9th, 2020
Short-run costs are never equal or lower than long-run cost. Indicate whether the statement is true or false ANSWER False. Since the long-run curve “envelopes” all short-run curves there is always a level of output where short-run cost are equal to long-run cost. However, short-run cost can never be lower than long-run cost.
Date: September 9th, 2020
A firm is currently producing 1140 units of output according to the production function q = L4/3K1/2 and faces input prices equal to w = $20 and r = $80. In the short run, capital is fixed at 5 units. In the long run, the firm’s costs are A) lower because the firm substitutes towards […]
Date: September 9th, 2020
For a monopoly, marginal revenue is less than price because A) the firm is a price taker. B) the firm must lower price if it wishes to sell more output. C) the firm can sell all of its output at any price. D) the demand for the firm’s output is perfectly elastic. ANSWER B […]
Date: September 9th, 2020
The United States is the most inequitable country in the developed world. Indicate whether the statement is true or false ANSWER False. Efficiency means how many goods to produce, and equity means how the goods are allocated. They do not move in opposite directions. Even if one might say that the United States is […]
Date: September 9th, 2020
Comparing the distribution of wealth of the wealthiest 1% of the population in the United States before and after the recent Great Recession to what occurred before and after the Great Depression, A) the percentage of the wealth of the wealthiest 1% increased after the recent Great Recession, unlike what happened after the Great Depression. […]
Date: September 9th, 2020
Long-run average cost is never greater than short-run average cost because in the long run, A) capital costs equal zero. B) the firm can move to the lowest possible isocost curve. C) wages always increase over time. D) wages always decrease over time. ANSWER B
Date: September 9th, 2020
Explain why the long-run total cost curve, not the short-run total cost curve, shows the lowest cost of producing any level of output. Is there an exception? What will be an ideal response? ANSWER In the long run, all costs are variable so the firm can select the least-cost mix of all inputs to […]
Date: September 9th, 2020
“If the wage rate paid to one form of labor is twice the cost of another form of labor, the first type of labor must be twice as productive.” Comment. Indicate whether the statement is true or false ANSWER true . Firms minimize cost by setting the ratio of marginal productivity per unit cost […]
Date: September 9th, 2020
At a given point in time, the Rawlsian welfare function gives equal weight to each individual’s utility. Indicate whether the statement is true or false ANSWER False. The Rawlsian welfare function gives a weight of 1 to the utility of the worst-off person and a weight of zero to the utilities of all others. […]
Date: September 9th, 2020
