Two small airlines provide shuttle service between Las Vegas and Reno. The services are alike in every respect except that Fly Right bought its airplane for $500,000, while Fly by Night rents its plane for $30,000 a year
If Fly Right were to go out of business, it would be able to rent its plane to another airline for $30,000. Which airline has the lower costs? A) Fly Right.
B) Fly by Night.
C) Neither, the costs are identical.
D) Neither, Fly by Night has lower costs at small output levels and Fly Right has lower costs at high output levels.
C
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A firm’s fixed cost
A. does not vary with output. B. does not change between the short run and the long run. C. is generally a higher percentage of its total cost at high output quantities than at low output quantities. D. All of the above are true.
Given the scenario described, if the market price of hammers increased from $9 to $13:
Assume there are three hardware stores, each willing to sell one standard model hammer in a given time period. House Depot can offer their hammer for a minimum of $7. Lace Hardware can offer the hammer for a minimum of $10. Bob's Hardware store can offer the hammer at a minimum price of $13. A. House Depot's producer surplus would increase by $4. B. Lace Hardware Hardware's producer surplus would increase by $3. C. Bob's Hardware's producer surplus would remain unchanged. D. All of these statements are true.
A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40 . The firm produces 100 units of the product, which sell for a price of $10 . This firm is
a. maximizing profit when it hires four workers b. not maximizing profit and should hire more workers to increase profit c. not maximizing profit and should hire fewer workers to increase profit d. not maximizing profit when it produces 100 units of the product and should increase production to increase profit e. not maximizing profit when it produces 100 units of the product and should decrease production to increase profit
Suppose we were analyzing the pound per Swiss franc foreign exchange market. If Switzerland's central bank intervenes to raise the value of the Swiss franc, then:
a. The demand for Swiss francs in the foreign exchange market rises, and Switzerland's monetary base falls. b. The supply of Swiss francs in the foreign exchange market rises, and Switzerland's monetary base rises. c. The supply of Swiss francs in the foreign exchange market rises, and Switzerland's monetary base falls. d. The demand for Swiss francs in the foreign exchange market rises, and Switzerland's monetary base rises. e. The demand for Swiss francs in the foreign exchange market rises, and Switzerland's monetary base remains unchanged.