Government failure
A. Results when government intervention fails to improve market outcomes.
B. Occurs whenever the government intervenes in the market.
C. Occurs whenever there is market failure.
D. Does not occur; only market failure occurs.
Answer: A
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The above figures show the market for oranges. Which figure(s) shows the effect of an increase in the price of bananas, a substitute for oranges?
A) Figure A B) Figure C C) Figure D D) Figure A and C
Sally Rand owns a ceiling fan company. She sells 1,000 ceiling fans at $50 each. Each fan costs her $20. She uses her own money to buy the fans; she withdraws the money from her savings account where it earns 5 percent interest. Before going into the ceiling fan business, she worked as a fan-dancer at $25,000 a year. Should Sally remain in business?
What will be an ideal response?
To answer the question, refer to the following figure, showing the marginal revenue product (MRP) and the average revenue product (ARP) curves of a perfectly competitive firm hiring a single variable input, labor.
If the wage is $20, how many workers will the firm hire?
A. 200 B. 175 C. zero D. 225
Technical efficiency is achieved when a firm produces
A. Enough output to cover the opportunity cost of resources. B. An amount less than or equal to the production function. C. Below the opportunity cost for the resources it uses. D. At an amount indicated by a point on the production function.