Refer to the above graph for a firm in pure competition. Line B is horizontal because:
A. the firm has a perfectly elastic demand curve.
B. the firm has a perfectly inelastic demand curve.
C. total revenue is greater than marginal revenue.
D. marginal revenue is greater than total revenue.
Answer: A
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Let L represent the quantity of labor, and let Q represent the quantity of output. Suppose a certain production function includes the points (L = 7, Q = 27), (L = 8, Q = 35), and (L = 9, Q = 45). Based on these three points, this production function exhibits diminishing marginal product
a. True b. False Indicate whether the statement is true or false
The point where the indifference curve is tangent to the budget line
A) is the best affordable point. B) is where the marginal rate of substitution exceeds the relative price by as much as possible. C) is a point on consumer's demand curve. D) All of the above answers are correct.
If the marginal cost of reducing pollution is positive, then:
A. the optimal amount of pollution is zero. B. the marginal benefit of reducing pollution is zero. C. the optimal amount of pollution is greater than zero. D. pollution should be reduced as much as technically feasible.
The underlying reason that there are unattainable points on a production possibilities frontier diagram is that there
A. is a scarcity of resources within a fixed level of technology. B. is unemployment of resources. C. are always choices that have to be made. D. is government.