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
The learning curve is the relationship between A) returns to scale and cumulative costs. B) marginal costs and current output. C) marginal product of labor and current output. D) average costs and cumulative output. ANSWER D
Date: September 9th, 2020
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
“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
In the short run, the expansion path is A) horizontal. B) vertical. C) diagonal. D) indeterminate. ANSWER A
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
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
