If you receive $18 worth of pleasure from the first hole of golf played and your additional pleasure from succeeding holes drops $1 for each hole played. You must pay $25 up front to get on the course but you can then play as many holes as you like for the day without any further charge. How many holes of golf will you play?
A. 18
B. 9
C. 12
D. As many holes as can be played from dawn until dusk.
Answer: A
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The cost-plus-markup theory is an inadequate explanation of relative prices because
A) it does not explain why there is a standard percentage markup in most industries. B) it is too simple, and simple theories are rarely as useful as more complex theories. C) the theory is inconsistent with observable relationships between marginal costs and prices. D) people who actually set prices do not describe the process as cost-plus.
The Cobb-Douglas production function for a beer manufacturer is q=1.52L0.6K0.4. If we assume that the firm's capital is fixed at 250 units and the rental rate of capital is $5 per unit, then average fixed cost is
A) $1250. B) $1250/q. C) 1.52L0.6(250)0.4. D) Unable to determine with information given.
GDP does NOT include intermediate goods because
A. intermediate goods are not valuable. B. intermediate goods are not useful to consumers. C. that would understate the true size of GDP. D. that would count the value of intermediate goods twice.
A sharp increase in the number of medical errors increases the number of lawyers hired to determine medical malpractice settlements. This will
A) increase GDP and increase well-being in the economy. B) increase GDP and decrease well-being in the economy. C) decrease GDP and increase well-being in the economy. D) decrease GDP and decrease well-being in the economy.