Refer to Figure 9.1. What is the maximum profit that can be achieved?
A. $250
B. $500
C. $750
D. $850
B. $500
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Which of the following expenditures is classified as a discretionary expenditure of the U.S. federal government?
A) federal employee pensions B) student loans and grants C) Social Security D) food stamps
Sizeable budget deficits can be expected in the years ahead because
a. the retirement of the baby boom generation will soon begin to push expenditures on both Social Security and Medicare upward. b. the political incentive structure encourages politicians to spend more revenue than they are willing to tax. c. both a and b are true. d. both a and b are false. Budget surpluses can be expected in the years ahead.
When the government uses a command-and-control policy to solve an externality, it
a. is usually the most effective policy option available. b. creates policies that directly regulate behavior. c. usually involves taxing the consumption of a commodity. d. typically refers to the Coase theorem to structure the policy.
When carmakers began to cut the costs of producing cars by designing the chassis, engines, and transmissions so that different models could be produced on the same assembly line, production costs fell $240 per car. This idea best illustrates:
A. diminishing marginal product. B. diseconomies of scale. C. economies of scale. D. constant returns to scale.