Answer the following questions true (T) or false (F)
1. An economic model is a complex version of reality used to analyze real-world economic situations.
2. Optimal decisions are made at the point where marginal benefit is maximized.
3. If it costs Hobie $900 to produce 5 lamps and $1,200 to produce 6 lamps, then the difference of $300 is the marginal cost of producing the 5th lamp.
1. FALSE
2. FALSE
3. FALSE
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The basic activity of a firm is
A) to use inputs to produce outputs of goods and services. B) to compete with other firms that produce similar products. C) to provide jobs for its employees. D) to set the prices of its products as high as possible.
If you hold money in anticipation of household emergencies and you give up long-term interest-bearing accounts, you are exercising the
a. speculative motive for holding money b. transactions motive for holding money c. opportunity cost motive for holding money d. precautionary motive for holding money e. regressive cost of holding money
The persistence of budget deficits during the last several decades is not surprising because politicians will find
a. budget surpluses more attractive than budget deficits. b. tax increases more attractive than increases in government expenditures. c. budget deficits more attractive than budget surpluses. d. reductions in government expenditures more attractive than tax reductions.
Refer to the diagram above, which shows three supply curves for corn. A movement from point a to point b is caused by a change in the:
Price of corn in the market Number of corn farmers Price of resources used to produce corn Technology of corn farming