Economies of scale can be caused by
a. all of the following
b. short-run increases in marginal productivity
c. the use of larger, more specialized machines
d. higher information costs as a firm expands
e. bureaucratic red tape as a firm expands
C
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Which of the statements below is primarily normative in nature?
A) There is an unequal distribution of income in the United States. B) The distribution of income is more unequal in the United States than it is in Japan. C) The inequality of income that exists in the United States is partly caused by an unequal distribution of wealth. D) The distribution of income in the United States should be more equal than it is.
Which of the following is not an example of moral hazard?
A. Investment banks use 40-1 leverage, knowing that if the market collapses, the government will come to the rescue. B. A backcountry skier takes an excessively dangerous run, knowing that local rescue crews will come to his aid if he gets in an accident. C. Insurance companies stopped offering insurance policies in New Orleans after a major hurricane, knowing the government will offer subsidies to draw people back. D. Domestic automobile companies fail to design high-quality fuel-efficient cars, hoping that the government will save them if oil prices skyrocket.
Consider a Stackelberg duopoly with the following inverse demand function: P = 100 ? 2Q1 ? 2Q2. The firms' marginal costs are identical and are given by MCi = 2. Based on this information, the Stackelberg follower's reaction function is:
A. QF = 24.5 ? 0.5QL. B. QF = 24.5 ? QL. C. QF = 49 ? 0.25QF. D. QF = 24.5 ? 0.25QL.
In the short run, a firm in monopolistic competition produces where P = MC
Indicate whether the statement is true or false