Problems are most likely to arise when:
A. one person knows more than another.
B. both parties lack the same information.
C. people have good enough information to make acceptable choices.
D. complete information is impossible to obtain.
Answer: A
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When one person's opportunity cost of producing a good is lower than another person's opportunity cost of producing the same good, it is called
A) an absolute advantage. B) a comparative advantage. C) specialization. D) production possibilities. E) a trade-off.
A perfectly competitive firm will maximize its profit at the rate of output where the vertical distance between its total revenue curve and total cost curve is the largest. This is the same rate of output where
A) marginal revenue equals marginal cost. B) marginal revenue equals marginal profit. C) marginal revenue equals average revenue. D) average total cost equals marginal revenue.
The use of fiscal policy to stabilize the economy is limited because
A) changes in government spending and tax rates have a small effect on interest rates. B) the Internal Revenue Service (IRS) resists changes in tax rates because of all the changes they would have to make to the tax code. C) changes in government spending and tax rates have a small effect on aggregate demand. D) the legislative process can be slow, which means that it is difficult to make fiscal policy actions in a timely way.
A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5 . The firm can sell the 100th unit for $4.75 . The firm should continue to produce 100 units in order to maximize its profits (or minimize its losses)
a. True b. False Indicate whether the statement is true or false