Which of the following is most likely a fixed cost?
a. Raw materials costs
b. Shipping charges.
c. Property insurance premiums.
d. Fuel costs for running the factory.
c
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The reason economists consider monopoly to be socially undesirable is that monopolists:
A. can charge any price they want. B. produce less than the socially optimal level of output. C. earn too much economic profit. D. exploit the inelastic nature of demand.
Total utility can be thought of as the
A. total satisfaction derived from a bundle of goods. B. minimum amount of money a consumer is willing to spend on a bundle of goods. C. additional satisfaction a consumer receives from the marginal unit of a good. D. willingness to pay for the marginal unit of a good.
Answer the following statement(s) true (T) or false (F)
1. A Pigou tax forces car manufacturers to internalize the cost of pollution. 2. Cap and Trade is so named because the government puts a “cap” on the amount of exports that domestic firms are allowed to “trade” with foreign nations. 3. A Cap and Trade system is more prone to error than a Pigou tax. 4. Pigou taxes are unnecessary in the presence of transaction costs. 5. Pigovian analysis indicates that a subsidy should be awarded when economic activity creates social benefits.
If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is
A) perfectly inelastic. B) relatively elastic. C) perfectly elastic. D) unit elastic.