Answer the following statements true (T) or false (F)
1) All else equal, if a firm has complex input specifications, it is likely cost saving for the firm to buy the input for another firm.
2) All else equal, if a firm's long-run average cost curve increases as more of an input is produced and the firm requires a large quantity of the input, it is likely cost saving for the firm to buy the input from another firm.
3) All else equal, if a firm needs a small quantity of an input, it is likely to be cost saving for the firm to make the input.
4) If a firm has a long-run average cost of $4 when it produces 5,000 units of an input and has a long-run average cost of $2 when it produces $12,000 units, the firm is experiences economies of scale.
5) All else equal, the more of an input a firm needs per year, the more likely that the net present value from making the input internally is positive.
1) FALSE
2) TRUE
3) FALSE
4) TRUE
5) TRUE
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Everything else remaining unchanged, if a new seller enters a market to compete with an existing monopoly that is enjoying economies of scale, it will lead to:
A) higher profits for both firms. B) higher profits for the existing firm. C) lower profits for the existing firm. D) higher market power for the existing firm.
Detrimental externalities like pollution are a shortcoming of the market mechanism. Do they occur in free market economies alone? Explain with examples.
What will be an ideal response?
The difference between an unbalanced and a balanced panel is that
A) you cannot have both fixed time effects and fixed entity effects regressions. B) an unbalanced panel contains missing observations for at least one time period or one entity. C) the impact of different regressors are roughly the same for balanced but not for unbalanced panels. D) in the former you may not include drivers who have been drinking in the fatality rate/beer tax study.
High Tech, Inc. produces plastic chairs that sell for $10 each. The following table provides information about how many plastic chairs can be produced per hour. Number of WorkersChairs Produced Per Hour00110218324428530For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30?
A. 3 B. 2 C. 4 D. 1