Figure 6.3 shows the cost structure of a firm in a perfectly competitive market. If the market price is $3 and the firm shuts down in the short run, its profit is:
A. -$300.
B. -$600.
C. -$900.
D. -$1,200.
Answer: C
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If the government does not know the efficient level of a Pigouvian tax to correct for a negative production externality, efficiency will still be enhanced so long as the government imposes a per-unit tax.
Answer the following statement true (T) or false (F)
Transactions costs are defined to be the costs of:
a. negotiating and enforcing contracts. b. complying with environmental regulations. c. eliminating market and government failures. d. finding and obtaining offsets.
Ransom E. Olds
A. was the first automobile manufacturer to use a division of labor and an assembly line. B. was the first automobile manufacturer to manufacture a standardized engine with interchangeable parts. C. sold millions of cars at a small unit of profit that allowed his company to dominate the industry. D. All of the choices are true.
If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ________ has a(n) ________ advantage in producing shoes.
A. Jane; comparative B. Bob; absolute C. Bob; comparative D. Jane; absolute