Profit maximization occurs where
A) each factor is used up to the point where its marginal revenue product is equal to its marginal factor cost.
B) each factor is used up to the point where its marginal physical product is equal to its marginal factor cost.
C) average variable cost equals marginal cost.
D) average variable cost equals average total cost.
Answer: A
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The disagreement between A. C. Pigou and Ronald Coase arose because
A. Pigou argued that the government should ban all externality-generating activities, while Coase thought that taxes and subsidies should be used instead. B. Coase argued that the government should ban all externality-generating activities, while Pigou thought that taxes and subsidies should be used instead. C. Pigou argued that the government should use taxes and subsidies to adjust for externalities, while Coase proposed a market solution to the externality problem. D. Coase argued that the government should use taxes and subsidies to adjust for externalities, while Pigou proposed a market solution to the externality problem.
Price discrimination is welfare reducing
A) False, price discrimination can increase the coverage of a market thereby increasing welfare. B) False, price discrimination limits the coverage of a market thereby increasing welfare. C) True, price discrimination limits the coverage of a market thereby increasing welfare. D) True, price discrimination can increase the coverage of a market thereby increasing welfare.
An Australian investor buys a U.S. Treasury bond that has a price of $10,000 . pays 5 percent interest, and matures in a year. Between the purchase date and the maturity date, the exchange rate changes from $1 = AUD 5.0 to $1= AUD 5.2 . What will be the Australian investor's rate of return from the U.S. bond?
a. 4 percent b. 7 percent c. 9.2 percent d. 12 percent e. 25 percent