Answer the following statements true (T) or false (F)
1. Under perfect competition, each firm can sell its entire supply at the market price.
2. The output level that yields maximum profit under perfect competition is where MR equals MC.
3. Under conditions of perfect competition, profits exist whenever AR is above AVC at equilibrium output.
4. On a graph of average cost curves, the space between ATC and AVC represents AFC.
5. Under conditions of perfect competition, if MR is below ATC at equilibrium output, the firm is suffering a loss.
1. TRUE
2. TRUE
3. FALSE
4. TRUE
5. TRUE
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The International Space Station is a joint project of the United States, Russia, Japan, Canada and the European Union. This suggests that _____
a. if the space station is a public good then the optimal size of the sharing group is larger than one country b. each country would have been unable to raise the money to pay for the space station on their own c. there are significant negative externalities involved that should be spread over more individuals d. Australians do not value space exploration
In constructing models, economists
a. leave out equations, since equations and models tend to contradict one another. b. ignore the long run, since models are useful only for short-run analysis. c. sometimes make assumptions that are contrary to features of the real world. d. try to include every feature of the economy.
Education is heavily subsidized through public schools and government scholarships. This subsidization of education reflects the fact that
a. a negative externality requires a subsidy to move the market equilibrium closer to the social optimum. b. the social cost of education exceeds the private cost of education. c. the social value of education exceeds the private value of education. d. the market-equilibrium quantity of education exceeds the optimal quantity of education.
Infrastructure, such as public works and public services, is also referred to as
A. social capital. B. human capital. C. tangible capital. D. intangible capital.