The marginal cost curve intersects the average fixed cost curve at its minimum. Indicate whether the statement is true or false ANSWER False. Marginal cost intersects average variable cost (and average cost) at its minimum.
Date: September 9th, 2020
Every point on the joint production possibilities frontier represents A) an initial endowment. B) inefficient production. C) the marginal rate of substitution of goods for each producer. D) at least one producer specializing in production. ANSWER D
Date: September 9th, 2020
Suppose the current market wage rate (w) is $4. In the short run, a firm’s marginal cost at the current output level is $2. What is this firm’s marginal product of labor? A) MPL = 0.5 B) MPL = 1 C) MPL = 2 D) MPL = 8 ANSWER C
Date: September 9th, 2020
In the long run, fixed costs are A) sunk. B) avoidable. C) larger than in the short run. D) not included in production decisions. ANSWER B
Date: September 9th, 2020
Assume a government likes a particular equilibrium along the contract curve. It can achieve that equilibrium through competition and income redistribution. Indicate whether the statement is true or false ANSWER True . This statement is called the Second Welfare Theorem.
Date: September 9th, 2020
In the short run, a firm ‘s output level is 10 units. Its total cost is $4000 and its average fixed cost is $100. What is this firm’s average variable cost (AVC) of producing 10 units? A) AVC = $250 B) AVC = $275 C) AVC = $300 D) AVC = $400 ANSWER C […]
Date: September 9th, 2020
Consider a society consisting of just a farmer and a tailor. The farmer has 10 units of food but no clothing. The tailor has 20 units of clothing but no food. Suppose each has the utility function U = F C. The price of clothing is always $1. If the price of food is […]
Date: September 9th, 2020
What are the functions for MC and AC if TC = 40 + 10q + 5q2? A) MC = 10q; AC = 10 + 5q B) MC = 10 + 10q; AC = 40/q + 10 + 10q C) MC = 10 + 10q; AC = 40/q + 10q2 D) MC = 20 + 10q; […]
Date: September 9th, 2020
In the short run, average variable costs are minimized when A) MPL equals APL. B) APL is maximized. C) MPL is maximized and APL is increasing. D) Both A and B. ANSWER D
Date: September 9th, 2020
The so-called “death tax” might A) aim to alter endowments so as to attain an inefficient outcome. B) aim to alter endowments consistent with the First Theorem of Welfare Economics. C) aim to alter endowments consistent with the Second Theorem of Welfare Economics. D) aim to alter prices consistent with the First Theorem of Welfare […]
Date: September 9th, 2020
