A firm with total revenue of $500, total cost of $700, and variable cost of $400 should continue to operate its production facility.
Answer the following statement true (T) or false (F)
True
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A free market fails when
A) firms that produce goods which create positive externalities go bankrupt. B) firms that produce goods which create negative externalities earn high profits. C) there is an external effect in either production, consumption, or both. D) there is government intervention.
Suppose your neighbor likes to repair motorcycles in his front yard during evenings and on weekends, and he earns $400 per week from this work
However, the sight of piles of greasy motorcycle parts and the additional noise and traffic caused by his customers reduces your value of living in this neighborhood by $300 per week. If your neighbor has a right to operate this business, what is the efficient outcome? A) He continues to operate the business. B) You can pay him to move the business to another location. C) He pays you to let him continue working on motorcycles at his home. D) There is no efficient outcome from this situation.
When the price of a good increases with other things unchanged, the real income of the consumer:
A. decreases. B. increases. C. is unchanged. D. None of the statements is correct.
Supporters of the World Trade Organization contend that it:
A. Imposes safeguards for worker safety in member nations B. Weakens the environmental laws in member nations C. Undermines minimum wage laws in member nations D. Liberalizes trade among member nations