Which of the following statements is TRUE about the relationship among external, internal and social costs?
A. Internal costs will always be higher than external costs.
B. Internal costs will never equal external costs.
C. Social costs will always be higher than external costs.
D. Social costs will always be lower than internal costs.
Answer: C
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Suppose a firm's short-run production function is given by Q = F(L) = 4L. If the wage rate is $12 and the firm has sunk costs of $300, then the firm's cost function is:
A. C(Q) = $12L. B. C(L) = $300 + $3L. C. C(Q) = $300 + $3Q. D. C(Q) = $300 + $12Q.
The law of demand refers to the:
A. inverse relationship between the price of a good and the quantity of a good that people will buy. B. price increase that results from an increase in demand for a good of limited supply. C. inverse relationship between the price of a good and the quantity offered for sale. D. increase in the quantity of a good available when its price increases.
A derivative is a financial instrument that derives its value from another financial instrument, an underlying asset, or indices.
a. true b. false
Refer to Exhibit 2-8. Who has the comparative advantage in the production of good X?
