Refer to the graph shown. The marginal cost of producing the 60th unit is:
A. $6.50.
B. $3.50.
C. $3.00.
D. $5.00.
Answer: A
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If air travel and bus travel are substitutes,
a. an increase in the price of bus travel will decrease the demand for air travel. b. a decrease in the price of bus travel will decrease the demand for air travel. c. an increase in the price of bus travel will generally have no effect on the demand for air travel. d. an increase in the price of bus travel will shift the demand curve for air travel to the left.
A farmer has 1,000 acres on which he has previously grown corn. His yield per acre is 100 bushels of corn. If the corn payment rate is $0.43 a bushel, his production flexibility contract payment equals
A) $39,600. B) $43,000. C) $36,550. D) $12,345. E) none of the above
The argument for passive policymaking will be stronger if
A. wage flexibility is common. B. price flexibility is common. C. pure competition is widespread. D. all of these.
If policymakers use a pollution tax to control pollution, the tax per unit of pollution should be set
A) equal to the marginal external cost at the economically efficient level of pollution. B) equal to the marginal private cost of production at the economically efficient level of pollution. C) equal to the amount of the deadweight loss created in the absence of a pollution tax. D) at a level low enough so that producers can pass along a portion of the additional cost onto consumers without significantly reducing demand for the product.