For a firm, the relationship between the quantity of inputs and quantity of output is called the
a. profit function.
b. production function.
c. total-cost function.
d. quantity function.
b
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Two firms, Industrio and Capitalista, have access to five production processes, each of which has a different cost and gives off a different amount of pollution. The daily costs of the processes and the corresponding number of tons of smoke emitted are shown in the table below. Both firms currently use process A, and each emits 4 tons of smoke per day. The government is considering two plans to reduce pollution: requiring both firms to reduce pollution by 25 percent or auctioning pollution permits. Each permit would entitle the owner to emit one ton of smoke per day. Without a permit, no smoke can be emitted. Process(smoke/day) A(4 tons/day) B(3 tons/day) C(2 tons/day) D(1 ton/day) E(0 tons/day) Cost to Industrio ($/day) $350$400$500$700$1,000 Cost to Capitalista
($/day) $225$250$290$400 $600Given that both firms are currently using process A, the cost of requiring the firms to reduce pollution by 25 percent is ________ per day. A. $790 B. $375 C. $215 D. $75
A perfectly competitive furniture-rental firm in Phoenix incurs an economic loss if the average total cost of each rental is
A) greater than the marginal revenue of each rental. B) less than the marginal revenue of each rental. C) equal to the marginal revenue of each rental. D) equal to the price of each rental. E) greater than the average variable cost of each rental.
According to economic theory, social interactions are the result of
A) calculated choices by individuals B) chance and the laws of probability. C) genetic and environmental factors. D) random occurrences.
In a market where there are strong social and political forces:
A. quantity demanded might not equal quantity supplied. B. quantity demanded will be expected to equal quantity supplied. C. the invisible hand will overcome all other forces. D. the market will be in disequilibrium.