Does a competitive firm's price equal the minimum of its average total cost in the short run, in the long run, or both? Explain.
What will be an ideal response?
Answer: In the long run equilibrium, all firms produce at the efficient scale, price equals the minimum average total cost, and the number of firms adjusts to satisfy the quantity demanded at this price.
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The purely competitive employer of resource A will maximize the profits from A by equating the
A. price of A with the MRC of A. B. marginal productivity of A with the price of A. C. price of A with the MRP of A. D. marginal productivity of A with the MRC of A.
Sitting through a terrible movie till the end because you already bought the ticket is an example of:
A. sunk cost fallacy B. making a decision at the margin. C. rational behavior. D. negative utility endorsement.
A Gini coefficient of one indicates
a. the richest 10 percent of the people control 90 percent of the economy's income b. the poorest 10 percent of the people control 1 percent of the economy's income c. 50 percent of the people control 50 percent of the income d. perfect income equality e. perfect income inequality
Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus.Table 1.1Production Possibilities for BombersCombinationNumber of B-1 BombersOpportunity cost(Foregone Stealth)Number of Stealth BombersOpportunity cost (Foregone B-1)S0NA10 T1 9 U2 7 V3 4NAOn the basis of Table 1.1, you may infer that the law of increasing opportunity costs applies to increasing production of
A. Stealth bombers but not to B-1 bombers. B. B-1 bombers. C. Both B-1 bombers and Stealth Bombers. D. Neither B-1 bombers or Stealth Bombers.