Costs imposed on future users of a resource are called
a. Transactions costs
b. Social costs
c. Private costs
d. Depletion costs
e. User costs
Ans: e. User costs
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Which good most likely has the lowest elasticity of demand?
A) Macintosh computers B) Toothpicks C) Chemotherapy treatment D) Sirloin steaks E) VCR players
Some sources of air pollution may tend to cause global cooling
Indicate whether the statement is true or false
Refer to Scenario 17.3. Moral hazard arises in this situation because once the firm
A) pays the premium that is based on the 0.001 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.001. B) pays the premium that is based on the 0.01 probability, it has no incentive to spend the additional $80 for the fire protection program, so the true probability of loss is no longer 0.01. C) puts the fire protection program in place, it has less incentive to spend $300 for a premium, leaving the firm underinsured. D) puts the fire protection program in place, it has less incentive to spend $6,000 for a premium, leaving the firm underinsured. E) puts the fire protection program in place, it will consider that a substitute for insurance and not be able to deal with the loss from a fire should it occur.
Which two lines on a cost curve diagram intersect at the shutdown point?
a. Average variable cost and marginal revenue b. Marginal revenue and total cost c. Average variable cost and total cost d. Marginal revenue and marginal loss