A rational seller will sell another unit of output:
A. as long as the quantity demanded is greater than zero.
B. whenever the seller is earning a profit.
C. if the seller can charge more than the equilibrium price.
D. if the cost of making another unit is less than the revenue gained from selling another unit.
Answer: D
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According to the Coase theorem, externalities
A. must usually be internalized by taxation or subsidy. B. can be internalized by the market under certain conditions. C. result when firms fail to maximize profits. D. cannot be internalized if property rights are assigned. E. are not relevant to the issue of market failure.
Minimum wage laws contribute to structural unemployment by:
A. keeping wages below the market-clearing level. B. forcing unemployed workers to take the first job offered to them. C. allowing unemployed workers to search longer or less intensively for jobs. D. keeping wages above the market-clearing level.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
Other things being constant, the only way to move along a given supply curve for a product is for
A) the product's relative price to change. B) the future relative price of related goods to change. C) the number of sellers to change. D) technological changes to occur.