Refer to the diagram, where variable inputs of labor are being added to a constant amount of property resources. Average variable cost will be at a minimum when the firm is hiring:
A. Q 3 workers.
B. Q 2 workers.
C. Q 1 workers.
D. more than Q 3 workers.
B. Q 2 workers.
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As long as there is asymmetric information among consumers and positive search cost, if price is below the monopoly price and the same across all firms, then a competitive firm
A) can always profit from raising its price. B) can always profit from lowering its price. C) can profit from raising its price but by no more than the search cost. D) can profit from lowering its price but by no more than the search cost.
Suppose a firm has a production function given by Q = 2(2L)0.5K0.5. If the rental rate of capital is $100 per unit, the wage rate is $1,400 per week and the firm initially has 25 units of capital, what is the firm's short-run cost function?
A. C(Q) = 2,500 + 7Q2 B. C(L) = 2,500 + 1,400L C. C(Q) = 0.25 + 7Q2 D. C(L) = 0.25 + 1,400L
According to the Principle of Increasing Opportunity Cost, in expanding the production of any good, we should start by utilizing the resources that:
A. have the highest opportunity cost. B. have the lowest opportunity cost. C. we have the most of. D. we have the least of.
Suppose the stock market rises, causing a rapid increase in consumers’ wealth. This would lead to
A. a downward movement along the consumption function. B. a downward shift of the consumption function. C. an upward movement along the consumption function. D. an upward shift of the consumption function.