Which of the following is true?
i. Marginal cost is measured by the maximum price that consumers are willing to pay for another unit of a good or service.
ii. Producer surplus equals marginal benefit minus price, summed over the quantity produced.
iii. A supply curve is a marginal cost curve.
A) only iii
B) only i
C) only ii
D) i and ii
E) i and iii
A
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If the wage rate rises, then in the long run, the firm will replace some of its labor with other factors such as capital, even if it keeps its output level constant. This phenomenon is known as
a. the substitution effect. b. the scale effect. c. the regressive-factor effect. d. the factor-price effect.
One implication of the shape of the demand curve facing a perfectly competitive firm is that:
A. if the firm increases its price above the market price, it will earn higher revenue. B. if the firm increases its price above the market price, it will earn zero revenue. C. the market would be unable to reach a new equilibrium if demand changed. D. if the firm decreases its price below the market price, it will earn higher revenue.
If Mario's Pizza, a large frozen pizza distributor, builds a tomato sauce plant near Red Tomatoes, a large tomato farm, to reduce the costs of transporting fresh tomatoes, the tomato sauce plant is a(n) ________.
A) negotiation cost B) monitoring cost C) information asset D) transaction-specific asset
Costs that tend to deter firms from changing their prices in response to changes in the market equilibrium price are referred to as
A) large menu costs. B) small menu costs. C) real menu costs. D) burden costs.