Continue with the power plant from the previous question, where again coal currently sells for $60 a ton but will sell for either $54 or $66 next month with equal probability. Now suppose coal can be stored for a month at the cost of $2 per ton. How would the new alternative of being able to buy coal at today's prices and store it affect the amount the power plant would be willing to pay for an
option to buy coal next month at today's prices?
a. Increase its willingness to pay for the option.
b. Decrease its willingness to pay for the option.
c. Lead it to never pay for the option.
d. No effect. The new alternative of storing would never be chosen since it is worse than simply waiting and buying at next month's uncertain price.
d
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Sam, who owns a carpentry shop, discovered that with 4 laborers he could produce 18 cabinets per day. With 5 laborers he produced 25 cabinets and with 6 laborers he produced 36 cabinets. What was the MPP of the 5th laborer?
A) 8 cabinets B) 7 cabinets C) 6 cabinets D) 4 cabinets
Price exceeds marginal cost for a monopolistically competitive firm in long-run equilibrium because:
A. demand is perfectly elastic. B. economic profits are negative. C. economic profits are positive. D. demand is not perfectly elastic.
In the United States today, economists estimate that the natural rate of unemployment is between ________ and ________ percent.
A. 3; 5.5 B. 3; 4 C. 5; 6.5 D. 6.5; 7.5
Private goods are
A. rival in consumption, and their benefits are nonexcludable. B. rival in consumption, and their benefits are excludable. C. nonrival in consumption, and their benefits are nonexcludable. D. nonrival in consumption, and their benefits are excludable.