Suppose the market supply curve is p = 5 + Q. At a price of 10, producer surplus equals
A) 50.
B) 25.
C) 12.50.
D) 10.
C
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Thomas Edison once complained that he was not making a profit selling light bulbs because his plants were operating 25 percent below capacity. He estimated that he could increase output 25 percent with a 2 percent increase in the cost of production. He sold the 25 percent on the foreign market at a price below what he called the “cost of production.” We can deduce that Edison really meant
A. marginal cost was below average cost but less than marginal revenue. B. average cost exceeded variable cost, which exceeded marginal revenue. C. variable cost exceeded fixed cost but was less than marginal revenue. D. marginal cost was above average cost but greater than marginal revenue.
A firm in a perfectly competitive market
a. can raise the price of its product and sell more output b. can lower the price of its product and sell more output c. can increase its supply to lower the price d. can decrease its supply to raise the price e. accepts the market price for its product
The commodity substitution bias is that
A) consumers substitute high-quality goods for low-quality goods. B) government spending is a good substitute for investment expenditures. C) national saving and foreign borrowing are interchangeable. D) consumers decrease the quantity they buy of goods whose relative prices rise and increase the quantity of goods whose relative price falls.
There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. An increase in income growth in Mexico relative to income growth in the United States will cause the
A) dollar to appreciate. B) peso to depreciate. C) dollar to depreciate. D) a and b E) There is not enough information to answer the question.