What economic conditions are necessary to achieve productive efficiency under pure competition?
What will be an ideal response?
Productive efficiency requires that each good be produced in the least costly way. In the long run, competition forces firms to produce at the point of minimum average total cost and to charge a price which is just equal to those costs.
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Suppose Campus Books, a profit-maximizing firm, is the only supplier of the textbook for a given class. The marginal cost of supplying each book is constant and equal to $10, and Campus Books has no fixed costs. The table below shows the reservation prices of the eight students enrolled in the class.StudentReservation Price($/Book)Q60R54S48T42U36V30W30X30 If Campus Books is permitted to charge 2 prices, and the bookstore knows customers with a reservation price above $30 never bother with coupons, whereas those with a reservation price of $30 or less always use them, then what will be the bookstore's total economic profit?
A. $158 B. $150 C. $154 D. $130
Suppose, as in the 1970's in the U.S., that demographic groups which typically have higher unemployment rates become a larger percentage of the labor force. Would this have any effect on the long-run Phillips curve?
An example of a good that creates a positive network externality is:
A. social network websites (e.g. Facebook). B. the telephone. C. a workers' union. D. All of these are examples of good that create positive network externalities.
If the production function is Q = KL and capital is fixed at 1 unit, then the marginal product of labor when L = 25 is:
A. 15. B. ¼. C. 1/10. D. None of the answers are correct.