"Now that Terrance paints the broad surfaces and I do the trim work, we can paint a house in three-fourths the time that it took for each of us to do both." This statement most clearly reflects
a. the importance of secondary effects.
b. the fallacy of composition.
c. the law of comparative advantage.
d. behavior inconsistent with economizing.
C
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A natural monopoly that is regulated to set its price equal to its marginal cost
A) incurs an economic loss. B) makes zero economic profit. C) makes an economic profit. D) creates the maximum deadweight loss.
If a firm operates in a perfectly competitive market, then it will most likely
A) advertise its product on television. B) settle for whatever price is offered. C) have a difficult time obtaining information about the market price. D) have an easy time keeping other firms out of the market.
When Lorenzo eats 1 slice of pizza for lunch, his total utility is 23, and when he eats 2 slices of pizza for lunch, his total utility is 42. Assuming that Lorenzo's marginal utility from eating pizza is always positive, we can infer that his total utility from eating 3 slices of pizza at lunch is:
A. greater than 42 and less than 46. B. greater than 23 and less than 42. C. greater than 42 and less than 61. D. greater than 42 and less than 84.
Ally owns a shoe store. The market wage is $10 per hour, and the cost of capital is $2 per week for every $1000, of capital borrowed. Consider the isocost line associated with spending $8000, per week, and let the y-axis be the amount of capital borrowed in increments of $1000. Which of the following is not true?
A. If Ally employs 600 hours of work, she can borrow $1 million of capital. B. If Ally employs 400 hours of work, she can borrow $3 million of capital. C. The slope of the isocost line is ?5. D. If Ally borrows no capital, she can employ 800 hours of work. E. If Ally employs no workers, she can borrow $4 million of capital.