Sheryl sits on her patio and plays her guitar while her neighbors are outside. Sheryl neither pays nor receives any compensation for playing her guitar. Under what condition does her guitar-playing give rise to a positive externality?
Sheryl's guitar-playing gives rise to a positive externality if it enhances the well-being of her neighbors.
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Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit. That change would be described as: a. an increase in demand
b. a decrease in demand. c. an increase in quantity demanded. d. a decrease in quantity demanded.
Which of the following is a potential barrier to entry?
a. a low market price b. a high market price c. a standardized product d. economies of scale e. diminishing marginal productivity
An apple farmer must decide how many apples to harvest for the world apple market. He knows that there is a one-third probability that the world price will be $1, a one-third probability that it will be $1.50, and a one-third probability that it will be $2. His cost function is C(Q) = .01Q2. If the farmer is risk neutral:
A. he strictly prefers producing the expected profit-maximizing quantity to producing nothing. B. he strictly prefers to produce. C. he is indifferent between producing the expected profit-maximizing quantity and producing nothing. D. he should produce at a quantity in between zero and the expected profit-maximizing quantity.
Refer to Scenario 9.9 below to answer the question(s) that follow. SCENARIO 9.9: Sponsors invest $250,000 in a new greeting card business on the promise that they will earn a return of 10% per year on their investment. The business sells 52,000 greeting cards per year. The fixed costs for the business include the return to investors and $79,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($3,000 per week). The business is open 52 weeks per year.Refer to Scenario 9.9. The business is earning exactly a normal profit. Thus, the average price per greeting card must be
A. $1.52. B. $2. C. $4. D. $6.