James opened a baseball manufacturing operation, and initially the more balls he made, the lower the per-unit cost. Now, as output expands, his per-unit costs are rising. He concludes that diseconomies of scale have set in. Is he correct? Why?
Since diseconomies of scale apply to the long run, this is probably an incorrect conclusion. Diminishing returns have set in. As James initially expanded output, he experienced falling average total costs because his marginal cost was less than his unit cost. Now his marginal cost is greater than unit cost, and he's operating on the upward-sloping portion of his short-run average total cost curve.
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Which products are most likely to be most price elastic?
A. China and glassware B. Sugar and eggs C. Electricity and housing D. Clothing and auto repair
Refer to the following graph.
If the price is set at Pc:
A. a nonprice rationing mechanism must determine which producers will be able to sell the product. B. a nonprice rationing mechanism must determine which buyers will be able to purchase the product. C. the demand curve will shift to the left to achieve a new equilibrium. D. anyone willing and able to pay the asking price will be able to purchase the product.
Which of the following statements is a positive economic statement?
A. The number of families living in poverty in the United States is too high. B. Government programs to help the poor are just making problems worse. C. One in every five children in the United States is living in poverty. D. The government should eliminate poverty in the country.
How does the personal income measure differ from the disposable income measure?
What will be an ideal response?