Standby passengers on airlines who pay low rates for seats benefit from the low price. How are the airlines affected?
A. They lose, because the standby passengers do not cover the full cost of the seats.
B. They gain, because the additional revenue covers the “fixed costs” of the flight.
C. They lose, because the gain of the passengers must necessarily come at the expense of the airline.
D. They benefit as long as the additional revenue from the passengers exceeds the marginal cost.
E. Uncertain, because economic theory says nothing about this sort of situation.
Answer: D
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Refer to Figure 19-5. Suppose the pegged exchange rate is $0.11/yuan. Because of safety concerns and numerous product recalls, U.S. consumers lower their demand for Chinese products. Using the figure above, this would
A) decrease the shortage of Chinese yuan. B) decrease the surplus of Chinese yuan. C) increase the surplus of Chinese yuan. D) increase the shortage of Chinese yuan.
To find a firm’s total revenue at every quantity, all you need to know is
A. the demand curve for its product. B. the demand curve for its product and its total cost. C. its profit-maximizing price and quantity. D. its total profit curve.
What characteristic defines something as money?
A) assets declared by the government to be of value B) a medium of exchange widely accepted in an economy C) notes you can deposit in a savings account D) an asset that earns interest
Suppose the cost of producing copper tubing is $1 per foot. If production costs were measured on the vertical axis and quantity of copper tubing were measured on the horizontal axis, which of the following lines would have the smallest slope?
a. a line representing the quantity of tubing measured in inches b. a line representing the quantity of tubing measured in feet c. a line representing the quantity of tubing measured in yards d. the 45-degree line e. any vertical line