The Hound Dog Bus Company contemplates expanding its Virginia operations by offering service from Fairfax to Arlington. The total cost of the trip would be $120, of which $50 is fixed cost, which it has already paid. The firm expects to earn $60 in revenue from the trip. The Hound Dog Bus Company should
a. offer this service because it will earn a positive economic profit
b. not offer this service because the marginal revenue is less than the marginal cost
c. offer this service because the revenue exceeds fixed cost
d. not offer this service because the total cost exceeds the total revenue
e. offer this service because the added revenue exceeds the added cost of this service
B
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A pure public good is one that is:
A. nonexcludable but rival. B. neither nonrival nor nonexcludable. C. highly nonrival and highly nonexcludable. D. nonrival but excludable.
Suppose that if poor households have a price elasticity of demand for medical care of 0.70 and wealthy households have a price elasticity of demand for medical care of 0.10, then a 10% increase in the price of medical care would lead to poor households reducing their quantity demanded for medical care by:
A. seven times the amount that wealthy household reduce their quantity demanded for medical care. B. one-seventh the amount that wealthy households reduce their quantity demanded for medical care. C. one-tenth the amount that wealthy households reduce their quantity demanded for medical care. D. ten times the amount that wealthy household reduce their quantity demanded for medical care.
Most regional trade and WTO agreements practice
A) the harmonization standards only. B) separate standards only. C) mutual recognition standards only. D) a combination of harmonization, mutual recognition, and separate standards.
You read that 40 firms that grow and export strawberries to the United States decide to form a cartel. The cartel aims to raise the price of strawberries and reduce output to increase profits for the strawberry growers. You predict that this cartel will probably
A. not be successful because there are too many firms that are trying to organize the cartel and there are a number of good substitutes for strawberries. B. not be successful because it is difficult to export a perishable product like strawberries. C. be successful because enforcing the rules among only 40 firms is very manageable. D. be successful because the demand for strawberries is very inelastic.