According to Coase, firms
a. exist because the entrepreneur must prevent shirking
b. should not exist
c. should not exist if all participants in a market have perfect information
d. exist because of the transaction costs of coordinating many resources through markets
e. increase production costs and should therefore be limited
D
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Silvio's Pizza is a small pizzeria. The firm's production function is shown in the table above
Suppose that Silvio's costs include only the cost of renting ovens, which is $100 per oven per week, the labor cost, $280 per worker per week, and the opportunity cost of Silvio's entrepreneurship, $1,000 per week. Suppose Silvio's uses Plant 2. If Silvio hires the 4th worker, the firm will experience ________ marginal returns. A) diminishing B) increasing C) constant D) zero
Marginal revenue is the addition to total revenue resulting from the addition of one unit to total output.
Answer the following statement true (T) or false (F)
City streets, sewage systems, and police protection are all examples of
a. public goods b. private goods c. exclusive goods d. rival goods e. consumer goods
Using Figure 4.1, suppose that point B represents the optimal mix of output for a society. If market forces cause society to produce and consume at point C, then
A. There is market failure. B. Points A and D are unattainable with the given resources and technology. C. The forces of supply and demand will return society to point B. D. There is government failure.