When a firm has decreasing average costs over the entire range of market demand it is:
A. a natural monopoly.
B. an oligopoly.
C. rent seeking.
D. in a contestable market.
Answer: A
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Suppose a consumer is torn between buying a Chevy Tahoe or a Ford Expedition, each selling for $30,000. He eventually decides on the Tahoe. What's his opportunity cost?
A) $30,000 B) $30,000 plus taxes, tags, insurance, etc. C) The satisfaction he would have experienced owning the Ford Expedition D) The frustration he will face owning the Chevy Tahoe E) B, C, and D above.
If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are
A) normal goods. B) inferior goods. C) complements. D) substitutes.
Collusive arrangements tend to collapse when
a. there is a small number of sellers b. the benefits of cheating are great and the costs are low c. inflation is high d. interest rates are low e. there is a powerful price leader
On average, truck drivers who drive on dangerous ice-covered roads earn more per mile driven than similarly skilled truck drivers who drive on normal roads. The difference in pay can be attributed to
a. the marginal product of labor. b. the marginal product of capital. c. diminishing marginal returns. d. a compensating differential.