Which of the following is an example of an externality?
A. The reduction in health risks when Tom’s family receives a measles vaccine
B. Robert’s purchase of a new car
C. A firm’s investment of new computer technology
D. Eric’s choice to buy a new lawn mower
Answer: A
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Sun's Gas Station is a firm operating in a perfectly competitive industry. Sun's Gas Station sells each gallon of gas for $3. What is the total revenue earned by selling 180 gallons of gas?
A) $240 B) $540 C) $840 D) $3,300
Why does quantity demanded decrease when price increases?
a. People choose to reduce consumption of the item. b. People "drop out" of the market for the item. c. People find substitutes for the item. d. All of the above are correct.
Explain why the economic analysis of monopolistic competition is so complex
What will be an ideal response?
Consider a perfectly competitive firm with MC = 10 + q. If market demand is Q = 100 - P and the current industry output is 80 units, then the firm will produce
a. zero units. b. 10 units. c. 20 units. d. the answer cannot be determined without knowing what the supply curve is.