Refer to Table 4-3. The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear. If the price of cowboy hats decreases from $38 to $30
A) consumer surplus will rise by $6.
B) the marginal cost of producing the third cowboy hat will fall to $30.
C) producer surplus will rise from $8 to $24.
D) producer surplus will fall from $22 to $6.
D
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The marginal social cost is
A) equal to the marginal private cost plus the marginal external cost. B) equal to the marginal private cost minus the marginal external cost. C) the same as the marginal private cost. D) the same as the marginal external cost.
In long-run equilibrium in a monopolistically competitive market, firms typically: a. earn a normal profit
b. charge a price equal to marginal cost. c. earn an above-normal profit. d. charge a price equal to marginal revenue.
According to the text, if a policy is designed to move a production process toward efficiency when pollution exists, the best tax is a
A. proportional income tax. B. progressive income tax. C. sales tax. D. lump sum tax on pollution.
Students who talk loudly with each other in class
A) create an externality because other students cannot follow the lecture as well. B) disturb nobody. C) benefit the other students in class because they engage in conversation. D) only create an externality if they talk about something unrelated to class.