Related to the Economics in Practice on page 176: When there are only a few empty cabins on a large cruise ship, the marginal cost of adding extra passengers to occupy those cabins
A. is probably very low.
B. will be negative.
C. will primarily depend on the number of customers waiting to travel.
D. is generally quite high.
Answer: A
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When aggregate expenditure = GDP
A) net exports equal zero. B) macroeconomic equilibrium occurs. C) saving equals zero. D) the federal budget is balanced.
The observation that changes in an economic variable are unpredictable suggests that the relevant variable follows ________
A) a random walk B) tertiary unpredictability C) the life-cycle hypothesis D) the Tequila effect
Cost-reduction generates
a. Increases in long-run profitability b. Increases in long-run profitability only if the cost reduction is difficult to imitate c. Decreases in long run profitability d. No change in profitability
Refer to Figure 28.2. Assume this firm initially has marginal costs equal to Private MC1 and is polluting. If the government decides to use emission charges to reduce pollution, the firm's MC curve will shift to
A. MC3 and the rate of output will increase. B. MC2 and the rate of output will decrease. C. MC2 and the rate of output will increase. D. MC3 and the rate of output will decrease.