In order to assure allocative efficiency:
a. people's marginal rate of substitution must equal the economy's rate of product transformation.
b. people's marginal rate of substitution must equal the firm's rate of technical substitution among inputs.
c. a firm's rate of technical substitution must equal the economy's rate of product transformation.
d. all of the above.
a
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Suppose scientists discover that eating soybeans prevents cancer and heart disease. Other things constant,
A) demand for soybeans will increase and soybean prices will fall. B) the price of soybeans will increase and demand will fall. C) demand and prices of soybeans will increase. D) the quantity demanded of soybeans will change, but demand will remain the same.
A monopolist earning short-run economic profit determines that at its present level of output, marginal revenue is $23 and marginal cost is $30 . Which of the following should the firm do to increase profit?
a. Raise price and lower output. b. Lower price and lower output. c. Raise price and raise output. d. Lower price and raise output. e. Lower output but leave price unchanged.
When the market price has fallen below a firm's ATC but is above its AVC, in the short run, the firm:
A. then MC must be greater than MR. B. can minimize its losses by staying open. C. is earning positive profits. D. then a firm is covering all of its fixed costs, but not all of its variable costs.
The budget of an economy is said to be in deficit when: a. federal outlays exceed revenues
b. federal revenues exceed outlays. c. anticipated inflation rate exceeds its actual rate. d. there is a loss of value of a country's currency with respect to one or more foreign reference currencies. e. anticipated interest rate exceeds its actual rate.