Lectures in microeconomics can be delivered either by an instructor (labor) or a movie (capital) or any combination of both. Each minute of the instructor's time delivers the same amount of information as a minute of the movie
Which graph in the above figure best represents the isoquants for lectures in microeconomics when capital per day is on the vertical axis and labor per day is on the horizontal axis? A) Graph A
B) Graph B
C) Graph C
D) Graph D
C
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A firewood supplier has a very seasonal demand for its product. Its transport trucks lay idle during the warmer parts of the year. It can exploit economies of scope if
a. It merges with a manufacturer of wooden Christmas ornaments b. It turns into a rental trucking company during the warmer months for other seasonal producers such as ice-cream makers c. It starts producing other seasonal products that would sell mostly during the warmer months such as rustic lawn chairs d. B and C
In the long run a company that produces and sells organic tofu incurs total costs of $1,200 when output is 1,200 units and $1,650 when output is 1,400 units. The tofu company exhibits
a. diseconomies of scale because total cost is rising as output rises. b. diseconomies of scale because average total cost is rising as output rises. c. economies of scale because total cost is rising as output rises. d. economies of scale because average total cost is falling as output rises.
A local cable company has its rates set at P = $15 by a regulatory commission. Its current output is 10,000 households and its costs are as follows: ATC = $17; AVC = $14; and MC = $15. From this, we can tell that this is:
A. a fair price, and the firm earns a normal profit. B. a fair price, and the firm earns an economic loss. C. marginal cost pricing, and the firm earns a normal profit. D. marginal cost pricing, and the firm earns an economic loss.
In a Lorenz curve, perfect income equality is represented by
A) a vertical line. B) a horizontal line. C) a rectangular hyperbola. D) a 45-degree line originating from the origin.