A perfectly competitive firm has an 80 percent probability of a high demand of $10 and a 20 percent chance of a low demand of $8. To maximize expected profit, the firm should produce the quantity that sets the marginal cost equal to ________.
A) $9.60 B) $10.00 C) $9.20 D) $8.00
A) $9.60
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Which of the following sets of goods might, under the right circumstances, be substitutes for an automobile?
A) Buses, trains, planes B) Powerboats, blimps, motorcycles C) Motels, tents, cardboard boxes D) Designer suits, fine wines, fancy homes E) All of the above.
Perfect Shots is company specializing in wedding photos and they have a fixed advertising budget. Perfect Shots advertises on the radio and the television and it costs $5,000 per unit of radio advertising and $15,000 per unit of television advertising. At their current advertising levels, the marginal benefit from radio advertising is $5,800 and the marginal benefit from television advertising is
$14,250. To optimally allocate their advertising budget, Perfect Shots should ________. A) increase the amount of advertising in radio and television B) increase the amount of advertising in radio and decrease the amount of advertising in television C) decrease the amount of advertising in radio and television D) decrease the amount of advertising in radio and increase the amount of advertising in television
The law of increasing costs holds that the opportunity cost:
a. of a good decreases as the quantity of the good produced increases. b. of a good is proportional to the resources used in its production. c. of a good increases as more of the good is produced. d. of a good does not change with the resources used its production. e. changes as more of the good is produced.
Refer to Common Property I. The efficient level of production and consumption on the common property is
a. zero. b. Q1. c. Q2 d. cannot be determined from the graph.