Variable costs are:
A. costs that depend on the quantity of output produced.
B. costs that don't depend on the quantity of output produced.
C. one-time costs.
D. None of these is true.
Answer: A
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Market failure is a situation in which
A. negative economic profits persist in the long run. B. negative economic profits exist in the short run. C. the market does not provide the ideal or optimal amount of a particular good. D. both a and b E. a, b, and c
In considering economic profit in a market economy, it is correct to say that
A) there should never be any economic profit. B) economic profit will only occur, even in the short run, as a result of imperfect competition. C) economic profit performs an important function in allocating resources to their most highly valued uses. D) economic profit tends to reduce the production efficiency of the economy, leading to wasted resources.
John paints the exterior of his house and, as a result, his neighbor Christine is able to sell her home for $5,000 more than she could have before. John's house painting
a. creates a negative externality for Christine b. makes John a free rider c. results in an efficient market outcome for both parties since both benefit d. creates a positive externality for Christine e. was poorly done
Economies of scale in the production of a good imply that:
What will be an ideal response?