Figure 10-1
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Suppose a perfectly competitive firm’s situation is shown in Figure 10-1 and the firm is currently producing at D. What can be said about this situation?
A. The firm is suffering an economic loss but is maximizing profits.
B. The firm is not suffering an economic loss but is not maximizing profits.
C. The firm is not suffering an economic loss and should increase output.
D. The firm is suffering an economic loss and should decrease output.
Answer: B
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The above figure shows the market for finish carpenters in Bozeman. If there is a minimum wage set at $18, then there will be
A) unemployment of 200 workers. B) a surplus of 200 workers. C) unemployment of 400 workers. D) a surplus of 400 workers. E) no unemployment of workers and no surplus of workers.
The production possibilities frontier bows outward because
A) opportunity costs are decreasing as the production of a good increases. B) opportunity costs are increasing as the production of a good increases. C) opportunity costs are fixed as the production of a good increases. D) resources are of uniform quality.
When Wal-Mart decides to build a new retail store in a town, it will decide to build a large store rather than a small store if the large store is expected to earn a greater economic profit
What other motive would Wal-Mart have for choosing to build a large store? A) A larger store will help Wal-Mart maintain its position as the leading retail company in the world more than a smaller store would. B) Because of economies of scale, the average total cost of production is less for a larger store than a smaller store. C) A larger store will give Wal-Mart greater political influence in the community. D) A larger store may deter entry into the town by a rival firm.
The ratio of a change in consumption to a change in income is the
a. consumption ratio b. propensities to consume and to income c. average propensity to consume d. average propensity to consume and to save e. marginal propensity to consume