Suppose that opportunity costs are constant and that Fred can either bake a maximum of six pies or three cakes in a day. Ethel can either produce a maximum of eight pies or two cakes in a day. Fred's opportunity cost to produce one cake is
A) one-half pie.
B) two pies.
C) six pies.
D) four pies.
B
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The deadweight loss associated with output less than the competitive level can be determined by
A) subtracting the competitive level producer surplus from the producer surplus associated with less output. B) subtracting the consumer surplus from the producer surplus associated with less output. C) summing the consumer and producer surplus associated with less output. D) summing the change in the total consumer and producer surplus from moving from the competitive level of output to less output.
Oligopolistic firms engage in collusion to:
A. minimize unit costs of production. B. realize allocative efficiency, that is, the P = MC level of output. C. earn greater profits. D. increase production.
Savers are motivated by the
A. real interest rate. B. advertised interest rate. C. expected rate of inflation. D. nominal interest rate.
Which of the following statements is correct?
A. Marginal cost is the change in the average fixed cost associated with a change in output of one unit. B. The marginal cost curve intersects the average variable cost curve at its lowest point. C. If average variable cost is increasing, then average total cost must be increasing too. D. The marginal cost curve intersects the average variable cost curve at a level of output greater than where the marginal cost curve intersects the average total cost curve.