If a competitive firm is currently producing a level of output at which profit is not maximized, then it must be true that
a. marginal revenue exceeds marginal cost.
b. marginal cost exceeds marginal revenue.
c. total cost exceeds total revenue.
d. None of the above is correct.
d
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Sarah makes giant wind chime sculptures for a living. When she makes 4 sculptures, she earns $10,000. When the makes 5 sculptures, she earns $12,500. Next door, Gilbert runs a meditation clinic
When Sarah makes 4 giant wind chime sculptures, the noise from the sculptures does not disrupt his patients, and he earns $7,500. When Sarah makes 5 sculptures, the noise is disruptive and Gilbert's profits fall to $6,000. The city has an ordinance which prohibits noise that disrupts the community. a. If you were the benevolent social planner, would you like to see Sarah make 4 sculptures or 5? Why? b. If bargaining between Sarah and Gilbert is easy, how many sculptures will Sarah make? Describe the bargain that results, if any, including the amount of money that changes hands. c. Is the outcome in part b an outcome that the benevolent social planner would endorse? Why or why not?
A sewer system is
a. rival and exclusive, and therefore is a public good b. nonrival and nonexclusive, and therefore is a public good c. exclusive, but since it is nonrival, it is a public good d. nonrival, but since it is exclusive, it is a private good e. nonrival and nonexclusive, and therefore is a private good
Historical note: All of the following were examples in the text of goods that had been patented except
a. penicillin b. tabs on beer and soda cans c. Polaroid's instant film camera d. watercolor paint e. Xerox's photocopier
Which of the following scenarios best illustrates the concept of cyclical unemployment?
a. Grace loses her job because of new automated machinery. b. Sean quits his job to look for work that is more fun. c. Ellen quits looking for work because she doesn't think she can find a suitable job. d. Marian loses her job because of a recession.