In advising Congress and the President on how much to increase defense spending in response to security concerns, economists would suggest that they evaluate the
A. average cost per citizen of defense versus its average benefit.
B. median cost per citizen of defense versus its median benefit.
C. total cost of defense versus its total benefit.
D. marginal cost of each additional dollar spent on defense versus its marginal benefit.
Answer: D
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If the United States could produce 4 tons of potatoes or 2 tons of wheat per worker per year, while Ireland could produce 3 tons of potatoes or 2 tons of wheat per worker per year, the country with the comparative advantage in producing potatoes is ____ and the country with the absolute advantage in producing potatoes is ____
a. the United States; the United States b. the United States; Ireland c. Ireland; the United States d. Ireland; Ireland
Firms that spend the greatest percentage of their revenue on advertising tend to be firms that sell
a. industrial products. b. homogeneous products. c. consumer goods for which there are no close substitutes. d. highly-differentiated consumer goods.
Suppose the w = $20 and r = $30. The isocost line for a firm in this industry is:
A. K = 0.033C ? 0.66L. B. 1.5L + K = 0.5C. C. C = 20K + 30L. D. Depends entirely on the functional form of the production function.
Market power is
A. another term for equilibrium. B. the ability to raise prices above perfectly competitive prices. C. the balance between average and marginal product. D. the combination of price and product.