A firm has average fixed costs of $0.20 and average variable costs of $2.50 at an output of 500 units. The firm's total costs are therefore
A) $1,250.
B) $1,350.
C) $1,150.
D) $1,500.
Answer: B
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If more firms enter a market that initially had 20 firms in it, then the Herfindahl-Hirschman Index will ________
A) increase B) decrease C) not change D) change in an unpredictable direction
Refer to Figure 4-1. If the market price is $1.00, what is the consumer surplus on the fourth burrito?
A) $0 B) $0.50 C) $1.50 D) $2.25
Some economists believe that the economy benefits from firms having market power. Which of the following is an argument that has been made to support this position?
A) Large firms are better able than small firms to spend funds on research and development required to develop new products. B) Research has shown that the deadweight loss from monopolies is a small percentage of the value of production in the United States. C) Competition is very rare in the U.S. economy and few new products are produced by smaller, competitive firms. D) Large firms can afford to lobby the U.S. government in order to impose restrictions on imports and reduce the outsourcing of jobs to other countries.
Suppose that a country is producing on its PPC at a point to the left of the tangency between the trade line and the PPC. At the production point,
A) the opportunity cost in production of the good on the horizontal axis is less than its trade price. B) the opportunity cost in production of the good on the horizontal axis is more than its trade price. C) the opportunity cost in production of the good on the vertical axis is less than its trade price. D) the opportunity cost in production of the good on the horizontal axis may be either less than or more than its trade price. E) the opportunity cost in production of the good on the vertical axis equals its trade price.