Refer to the information provided in Figure 2.3 below to answer the question(s) that follow.
Figure 2.3Refer to Figure 2.3. Assume that this society's production possibility frontier is represented by Panel C. The opportunity cost of sailboats in terms of surfboards is
A. decreasing.
B. increasing.
C. infinite.
D. constant.
Answer: D
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The United Auto Workers union is largely responsible for the historically high pay of American auto workers by negotiating pay raises above those obtained by workers in other industries. In addition to increasing the pay of auto workers, what other long-run effect would this high pay have on the use of auto workers?
What will be an ideal response?
A firm that produces chemical solvents creates some air pollution because of the emissions from its manufacturing facilities. A tax is imposed on the firm, equal to the costs of environmental damage caused by a unit of the emissions
What is the result? A) The quantity of chemical solvents produced now will be the efficient amount. B) Demand for the chemical solvents will increase. C) Demand for the chemical solvents will decrease. D) Consumers of the chemical solvents will be willing to pay the full amount of the tax, and so the quantity produced will be unaffected.
From the late 1930s until the early 1970s, courts tended to follow per se rules when deciding antitrust cases. According to these rules,
a. a firm's control of a large market share was considered intrinsically illegal. b. the existence of only one or two firms in an industry was not necessarily an antitrust violation. c. both market share and predatory practices must be considered in determining whether a firm had violated the law. d. the court should only intervene if the firm charged "unfair" prices.
Firm A has a higher marginal cost than firm B. They compete in a homogeneous product Bertrand duopoly. Which of the following results will NOT occur?
A. QA < QB B. Revenue of firm A < Revenue of firm B C. ProfitA < ProfitB D. PriceA < PriceB