Why do economies of scale and monopoly power exist with network goods?
A. Many small firms must develop to serve all of the consumers willing to pay for access to the network good, so their costs are driven down.
B. Network goods require a group of sellers working together and this cooperation reduces the firms' cost per unit.
C. Just as the value of a network good decreases to each user as the total number of users increases, so does the long run average cost decrease as output increases.
D. As the number of people connected to a network increases, the greater the benefits each person gets and the smaller the cost per unit to supply.
Answer: D
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The governor has proposed to clean up all trash on the side of the highway. The project is estimated to cost the tax payers and additional $15,000. The city will benefit by having a clean highway which will entice tourists to stop along their routes. The project is estimated to bring in $18,000 of revenue from the highway being cleaned. Should the governor continue with the project?
A. Yes, the tax payers wanted the highway cleaned up. B. Yes, the project will bring in $3,000 more in MB than MC. C. No, the benefit from the project will only be $3000. D. No, the project will not bring in enough benefit to cover the costs.
The GDP deflator is a broader measure of the price level than the CPI because
A) it covers sales tax. B) it covers rents. C) it covers investment. D) it factors out fluctuations in seasonal items.
In the linear breakeven model, the relevant range of output is that range where the linearity assumptions of the model are assumed to hold
a. true b. false
Hours of OperationMarginal Cost16212318424530636742
Krystal runs a nail salon and needs to decide how many hours to stay open. Table 2.2 illustrates her marginal costs of staying open for each additional hour. Suppose that Krystal's marginal benefit of staying open per hour is $18. If she is following the marginal principle, how many hours should Krystal stay open?
A. 3 hours B. 4 hours C. 6 hours D. 7 hours