Is a monopolistically competitive firm allocatively efficient?
A) No, because it does not produce at minimum average total cost.
B) Yes, because it produces where marginal cost equals marginal revenue.
C) No, because price is greater than marginal cost.
D) Yes, because price equals average total cost.
Answer: C
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"When workers have a relatively small quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity by a relatively large amount.". This statement
a. is an assertion that production functions have the property of constant returns to scale. b. is consistent with the view that capital is subject to diminishing returns. c. is inconsistent with the view that it is easier for a country to grow fast if it starts out relatively poor. d. All of the above are correct.
In which of the following situations should a firm reduce its efforts to abate pollution?
A. The marginal benefit of abatement is less than its marginal cost. B. The marginal benefit of abatement is greater than its marginal cost. C. The marginal benefit of abatement is equal to its marginal cost. D. None of these
When a person throws a cigarette out of a car window and starts a brush fire, this is
A) an example of an external benefit. B) an example of an external cost. C) an example of a public good. D) an example of market power.
The domestic currency price of a representative domestic expenditure basket is
A) P, the domestic price level. B) E, the nominal exchange rate. C) P times E, the domestic price level times the domestic price level. D) P , the foreign price level. E) P times E, the foreign price level times the nominal exchange rate.