Figure 4-15
Recycling of newspapers has been undermined by its success. The supply of old papers, gathered diligently by those concerned with the environment, has increased dramatically, as has the number of firms that convert the material into recycled newsprint. The quantity demanded has remained relatively stable despite falling prices because newspapers consider recycled newsprint an inferior substitute for regular newsprint. Consequently, the price of recycled newsprint has fallen below the cost of production; recycling firms are going out of business; mountains of old newspapers are left behind. Which graph in Figure 4-15 best illustrates this situation?
a.
1
b.
2
c.
3
d.
4
a
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When a firm increases output and the costs rise disproportionately slower, then the long-run average cost curve is __________ and the firm is experiencing __________ .
A) upward sloping; diseconomies of scale
B) downward sloping; constant returns to scale
C) downward sloping; economies of scale
D) horizontal; constant returns to scale
The ________ the Herfindahl-Hirschman Index (HHI), the ________ the industry
A) higher; less competitive B) lower; less competitive C) higher; more firms in D) lower; more profitable
The three major components of a bond are the bond price, maturity date, and coupon rate.
Answer the following statement true (T) or false (F)
The goal of health insurance is to
a. redistribute income from the sick to the healthy. b. spread risk over a large group of people. c. equally distribute the probability of loss over a large number of people. d. collect sufficient premiums to cover all possible losses. e. equalize the availability of medical care across population groups.