You own the video game Grand Theft Auto V. The opportunity cost of playing this game for the second time
A. is zero.
B. is the value of the alternative use of the time you spend playing the game.
C. is one-half the cost of the game, as this is the second time you have played it.
D. cannot be calculated.
Answer: B
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Suppose a new vaccine for Lyme disease is developed by Merck, a large drug company. Which of the following is most likely to occur?
A) Merck will apply for a patent on the vaccine that grants it the monopoly rights to the vaccine for many years. B) Merck will have a monopoly on this vaccine because of economies of scale. C) Other firms will quickly copy the formula making the market for the vaccine competitive. D) Merck will not tell anyone about its discovery though it will sell the vaccine.
In regulating a natural monopoly, the price strategy that ensures the highest possible output and zero profit is one that sets price
A) corresponding to the demand curve where marginal revenue equals zero. B) equal to average variable cost where it intersects the demand curve. C) equal to average total cost where it intersects the demand curve. D) equal to marginal cost where it intersects the demand curve.
A consumer values a house at $525,000 and a producer values the same house at $485,000 . If the transaction is completed at $510,000 . the transaction will generate:
a. No surplus b. $25,000 worth of seller surplus and unknown amount of buyer surplus c. $15,000 worth of buyer surplus and $25,000 of seller surplus d. $25,000 worth of buyer surplus and unknown amount of seller surplus
If firms are producing at a profit-maximizing level of output where the price exceeds the average total cost:
A. accounting profits must be negative. B. economic profits must be zero. C. other firms will enter the market. D. firms will exit the market.