Figure 6.1 shows the cost structure of a firm in a perfectly competitive market. If the market price is $40, the firm's profit-maximizing output level is:
A. 500.
B. 650.
C. 900.
D. 1,200.
Answer: C
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The case where people purposely act in a careless way, for example, driving recklessly because they are insured, is called
A) asymmetric information. B) risk aversion. C) moral hazard. D) bounded rationality. E) thrill-seeking.
Which of the following is true in the classical model?
a. A spontaneous increase in spending can cause an increase in output and employment. b. An increase in output and employment can cause a decrease in spending. c. A spontaneous decrease in spending can cause an increase in output and employment. d. An increase in output and employment can cause an increase in spending. e. A spontaneous decrease in spending can cause a decrease in output and an increase in employment.
Which of the following is an effect of a minimum wage law that establishes a wage floor above the current market clearing? wage?
A) surplus labor, or unemployment
B) a decrease in the market clearing wage
C) a decrease in the quantity of labor supplied
D) an increase in the quantity of labor supplied
If tastes are Cobb-Douglas, they can be represented by a utility function that is homogeneous of degree k where k can take on any positive value.
Answer the following statement true (T) or false (F)