Refer to Table 2-18. What is Minnie's opportunity cost of making a hat?
A) 1/5 of an umbrella B) 1/4 of an umbrella C) 4 umbrellas D) 10 umbrellas
B
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Consider the Cobb-Douglas production function F(L,K) = AL?K?. Which of the following statements is true?
A. Increases in ? increase labor's productivity and raise MRTSLK. B. Decreases in ? increase labor's productivity and raise MRTSLK. C. Increases in ? increase labor's productivity and lower MRTSLK. D. Changes in ? will not affect MRTSLK.
An example of normative analysis is studying
a. how market forces produce equilibrium. b. surpluses and shortages. c. whether equilibrium outcomes are socially desirable. d. income distributions.
International trade under a floating exchange rate system
A. has been trouble-free owing to the stabilizing role of speculators in the currency markets. B. has suffered from so many problems that the volume of trade has declined significantly. C. exposes businesses to unavoidable risks when exchange rates change. D. has been subject to wild runs on currencies that were on the verge of devaluation.
Answer the following questions true (T) or false (F)
1. Economic efficiency is a market outcome in which the marginal benefit to consumers is equal to the marginal cost of production and the sum of consumer surplus and producer surplus is maximized. 2. If marginal benefit is greater than marginal cost, output is inefficiently high. 3. Deadweight loss refers to the reduction in economic surplus resulting from a market not being in competitive equilibrium.