Suppose a factory can be designed to produce either trucks or cars. The figure above shows the marginal cost and marginal benefit of producing trucks in terms of the forgone cars
a. What is the marginal benefit of the 25th truck?
b. What is the marginal cost of the 25th truck?
c. Should the 25th truck be produced? Why or why not.
d. What is the marginal benefit of the 75th truck?
e. What is the marginal cost of the 75th truck?
f. Should the 75th truck be produced? Why or why not?
g. What is the allocatively efficient quantity of trucks?
a. 3 cars
b. 1 car
c. This truck should be produced because people value the 25th truck at 3 cars, but it only costs 1 car to make the truck.
d. 1 car
e. 3 cars
f. This truck should not be produced because people value the 75th truck at 1 car, but it costs 3 cars to make the truck.
g. 50 trucks is the allocatively efficient quantity of trucks.
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Which of the following would not account for the observed wage differential between African Americans and whites in the United States?
a. differences in the quantity of on-the-job training b. differences in the quality of education c. discrimination by employers d. differences in job experience e. differences in access to public assistance programs
If the elasticity of demand for sugar cookies is 2.5, then a 10% change in price will lead to a 5% change in quantity demanded.
Answer the following statement true (T) or false (F)
Assume that an economy producing two products, skateboards and in?line skates, is initially in equilibrium, and that skateboards and in?line skates are substitutes. If consumer preferences shift away from skateboards and toward in?line skates, which of the following will not occur?
A. In the short run, firms producing skateboards will incur losses. B. Additional capital will begin to flow into skateboard production in the long run. C. In the short run, firms producing in?line skates will earn a profit. D. Additional capital will begin to flow into in?line skates production in the long run.