What is a marginal cost?
What will be an ideal response?
A marginal cost is the additional cost resulting from a small increase in the production of a good.
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Suppose that a regulatory agency helps producers maximize economic profit. This type of regulation coincides with
A) a natural monopoly. B) a marginal cost pricing rule. C) an average cost pricing rule. D) the capture theory of regulation. E) the social interest theory of regulation.
Is there a first-mover advantage in the Bertrand duopoly model with homogenous products?
A) Yes, first-movers always hold the advantage over other firms. B) Yes, first-movers may have an advantage, but it depends on the model assumptions. C) No, first-movers cannot choose a profit maximizing quantity because the second-mover can always produce a bit less and earn higher profits. D) No, the second-mover would be able to set a slightly lower price and capture the full market share.
The United States Congress passes a law requiring that all businesses, regardless of size, pay 100% of employees' healthcare costs. What is a likely result of this action?
A) Businesses will hire more workers. B) Congress will collect more tax revenue. C) Big Businesses will earn greater profits. D) Many small businesses will be forced to close.
(Last Word) Because there are so many sources of carbon dioxide, making monitoring difficult and costly, many economists:
A. prefer a carbon tax to cap-and-trade for reducing carbon dioxide emissions. B. prefer cap-and-trade to a carbon tax for reducing carbon dioxide emissions. C. believe that cap-and-trade and a carbon tax are both costly but should be implemented to reduce carbon dioxide emissions. D. believe that neither cap-and-trade nor carbon taxes can effectively reduce carbon dioxide emissions.