When long-run average costs decline as output increases, the firm is experiencing
A) negative returns to scale.
B) diseconomies of scale.
C) constant returns to scale.
D) economies of scale.
Answer: D
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A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.
If the market price of grills is $300, given the scenario described, the total consumer surplus would be: A. $1,070. B. $170. C. $200. D. None of these is true.
In the ordered pair (5, 3), 3 is the
a. horizontal location of the point. b. the slope. c. the x-coordinate. d. the y-coordinate.
As a result of a decrease in the price of gasoline, consumers can afford to buy more gasoline for more driving trips. This is an illustration of
A. consumer sovereignty. B. the substitution effect. C. diminishing marginal utility. D. the income effect.
Scarcity means we must:
A) consume less. B) produce less. C) make choices. D) earn more. E) work more