Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Ethel's opportunity cost to produce one cake is
A) one-half pie.
B) two pies.
C) six pies.
D) four pies.
D
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If there are economies of scale throughout the relevant output range of production, which is false? a. It is a natural monopoly
b. It is more efficient to have a single firm produce the good. c. It would typically result from a firm's possession of an exclusive patent. d. One large firm can produce at lower cost than two or more smaller firms.
Elvis loves steak. Suppose he values the first steak sandwich he eats at $5, the second at $4.50, and the third at $4 . If he buys the 3-for-$4 special, his consumer surplus is
a. $5 b. $4 c. $1.50 d. $9.50 e. $12
Equilibrium GDP
A. is below $4 trillion.
B. is above $4 trillion.
C. is exactly $4 trillion.
D. cannot be determined.
In the long run, a perfect competitor
A. earns zero economic profits. B. produces at its shutdown point. C. earns positive economic profits. D. earns positive profits but will not make losses.