To maximize its profits, a monopoly should produce the quantity where its marginal cost equals its:
a. average total cost.
b. average variable cost.
c. demand.
d. marginal revenue.
d
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The proposition that if property rights exist and are enforced, then private transactions are efficient is referred to as the
A) Coase theorem. B) property rights theorem. C) pollution rights theorem. D) emission rights theorem. E) private-market efficiency theorem.
What happens as a variable input increases while other inputs are fixed?
a. Eventually the fixed inputs will increase at a rate equal to or below the variable increases. b. Fixed costs will rise and variable costs will fall as they are spread over larger output. c. The average variable cost will remain equivalent to or below the average fixed cost. d. At some point the increase will lose its effectiveness, and additions to output will decline.
Consider two industries, industry W and industry X. In industry W there are five companies, each with a market share of 20% of total sales. In industry X, there are six companies. One company has a 50% market share and each of the other five firms has a
market share of 10%. a. Calculate the four-firm concentration ratio for each industry. b. Calculate the Herfindahl-Hirschman Index (HHI) for each industry. c. What do the values of the two concentration measures imply about the degree of market power in the two industries?
The figure above illustrates a small country's production possibilities frontier. Based on the figure, we can tell that the nation's resources are
A) not equally productive in all tasks because the production possibilities frontier is bowed out. B) unlimited because the slope is negative and the PPF is bowed out. C) equally productive in all tasks because the slope is negative. D) not equally productive in all tasks because the slope is negative. E) equally productive in all tasks because the production possibilities frontier is bowed out.