Suppose the fixed cost of building a nuclear power plant is $1 billion. Suppose also that the only variable cost is the labor of Homer Simpson, and he earns $10 per hour. If the plant generates 1,000 kilowatts each hour, and has already generated 1 billion kilowatts, what can you say about the marginal cost of the next kilowatt?
a. b and e.
b. The marginal cost is equal to $.01.
c. The marginal cost is equal to $1.01.
d. The marginal cost is rising.
e. The marginal cost is falling.
b
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In a market with asymmetric information, hidden actions exist if:
A) the buyer or the seller takes actions that are relevant for but not observed by, the other party. B) the production or consumption of the good being transacted gives rise to positive externalities. C) the production or consumption of the good being transacted gives rise to negative externalities. D) the production of the good being transacted involves a huge opportunity cost.
If Q = K1/2L1/2 the MPK is
a. constant b. diminishing c. increasing
A depression is different from a recession in that
A. a recession has inflation and a depression does not. B. a depression is much worse. C. a depression has inflation and a recession does not. D. a recession is much worse.
Because in oligopoly the actions of one firm have a perceptible effect on the other firms, oligopoly firms act strategically.
Answer the following statement true (T) or false (F)