A firm can produce two products with the cost function C(Q1, Q2) = 10 + 5Q1 + 5Q2 ? 0.2Q1Q2. The firm enjoys:
A. economies of scale in the two products separately.
B. economies of scale in the two products separately and cost complementarity.
C. cost complementarity and economies of scope.
D. economies of scope only.
Answer: C
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A difference between a perfectly competitive industry and a monopoly is that
A) in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. B) a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot. C) only monopolies have an incentive to maximize profit. D) perfectly competitive firms can have a public franchise. E) a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run.
The highest valued alternative that must be given up to engage in an activity is the definition of
A) marginal cost. B) marginal benefit. C) opportunity cost. D) economic equity.
The balancing of marginal costs and marginal benefits to obtain an efficient outcome is known as the equimarginal principle.
a. true b. false
A good that has social costs that exceed private costs has a quantity that is
A. the best society can do. B. too high. C. just right. D. too low.