Cab drivers operating from JFK Airport to the City of New York legally must charge a specific fare. This is an example of
A. social regulation.
B. the rate of return test.
C. economic regulation.
D. the market share test.
Answer: C
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Which of the following statements correctly characterizes the problem with comparing production outcomes that are stocks and flows?
A) Labor usage is always a flow, which makes it difficult to compare with stock inputs like capital. B) Most capital inputs are stocks, but the returns on these investments (profits) occur as a flow. C) Most capital inputs are flows, but economists treat these expenditures as stocks by using the opportunity or economic costs associated with these inputs. D) Business returns or profits may be equivalently viewed as stocks or flows, which makes it difficult to compare the returns with the input expenditures.
The figure below shows the marginal benefit curves for the two firms in an industry, Firm 1 and Firm 2. Which of the statements below is correct?
A) At $250, the industry-wide marginal benefit from advertising is 4 hours.
B) The industry-wide marginal benefit from 1 hour of advertising is $300.
C) The industry-wide marginal benefit from 1 hour of advertising is $550.
D) None of the above statements is correct.
Pollution is an example of a
A) public good. B) positive externality. C) private cost. D) negative externality
You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $30.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?
A. Hire collection agents until the marginal revenue product is equal to the wage-which will occur when more than five agents are employed. B. Hire five collection so as to maximize profits. C. Decrease the wage rate paid to collection agents so that their marginal revenue product will decrease. D. Shut down immediately, as the firm is not able to cover all of its variable costs.