If the marginal rate of return expected from a purchase of equipment is greater than the market interest rate, the firm should
a. not purchase the equipment
b. purchase the equipment
c. either purchase or not purchase the equipment, depending on the marginal resource cost
d. inform stockholders that the company expects a decrease in earnings from the purchase
e. seek government assistance in raising market interest rates
B
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Let D = demand, S = supply, P = equilibrium price, and Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles?
A) S increases, D no change, P decreases, Q increases B) D no change, S increases, P decreases, Q decreases C) D increases, S no change, P and Q increase D) D and S increase, P and Q decrease
Marginal cost pricing is a system of pricing in which the price charged equals the marginal cost of:
a. the first unit produced. b. each unit produced. c. the last unit produced. d. the profit-maximization unit.
According to experience, what is the most effective solution to highway congestion?
a) to discount transit passes b) to discourage urban sprawl by subsidizing urban apartment rents c) to build more roads d) to set a price for access to roads, which is paid by those who use them
Consider the following characteristics:
a. a market structure with barriers to entry b. demand curves that are easily identified c. firm cannot make zero profits in the long run d. firm can reap long-run profits. Which of the characteristics in the list above is shared by an oligopolist and a monopolist? A) a, b, c, and d B) a, b, and d C) a, c, and d D) a and d