Suppose labor and capital are the only two factors used by a firm to produce pencils. Which of the following statements is true of the average variable costs of this firm?
a. The average variable cost of this firm will be equal to the ratio of the cost of capital and the quantity of output produced by the firm.
b. The average variable cost of this firm will be equal to the ratio of the total cost of production and the quantity of output produced by the firm.
c. The average variable cost of this firm will be equal to the ratio of wages paid to the workers and the quantity of output produced by the firm.
d. The average variable cost of this firm will be equal to the ratio of the quantity of output produced by the firm and the wages paid to the workers.
c
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Which of the following statements is likely to be made by someone who believes in the new growth theory?
A) Population growth will limit long-run gains in real GDP per person. B) Competition will encourage discoveries of new ideas leading to greater economic growth. C) Choices made by human capital are likely to be inefficient. D) Economic growth will eventually slow. E) Although technological changes increase real GDP, these changes are random and unexplainable.
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. The deadweight loss created by this tax would be greater than shown in the figure above if
A) the demand were more elastic. B) the supply were more elastic. C) neither of the above. D) both A and B above.
The attribute that distinguishes money from other assets is that only money
A) retains its value during times of inflation. B) is counted in determining the size of an individual's wealth. C) serves as a medium of exchange. D) may be used as collateral for a bank loan.
When you rent a car, you might treat it with less care than you would if it were your own. This is an example of
a. market risk. b. moral hazard. c. adverse selection. d. risk aversion.