The market supply curve is found by
A) plotting the supply curves of individual firms.
B) plotting and summing up the supply curves of individual firms.
C) plotting the supply curves of individual consumers.
D) taking the supply curve of the representative firm.
Answer: B
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In general, the marginal benefit curve
A) has a positive slope. B) has a negative slope. C) is horizontal. D) is vertical. E) is concave.
Which of the following statements is true?
A) The principle of comparative advantage provides a basis for trade when two nations have the same opportunity cost of producing a good. B) The principle of absolute advantage provides a basis for the determination of the terms of trade between two trading nations. C) The principle of absolute advantage forms the basis of trade when a nation can produce more of all the goods and services compared to the other nations. D) The principle of comparative advantage provides a range of prices within which trade will occur.
If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the equilibrium quantity will ________
A) fall; increase B) fall; decrease C) rise; increase D) rise; decrease
Fresh Flour makes baking flour and sells its flour in 4 pound sacks or bags. The managers of Fresh Flour are considering whether the firm should make or buy the flour sacks. To make the sacks, Fresh Flour needs a $500,000 piece of equipment. Using this equipment, Fresh Flour can make a flour sack for $0.01 and, for simplicity, ignore taxes and assume that the $0.01 cost includes depreciation and
all other costs. Fresh Flour would finance the $500,000 investment using its own funds and, if it purchased the flour sacks from another firm, it would pay $0.19 a flour sack. The life span of the equipment is 10 years and it has no salvage value at the end of the ten years. If the discount rate is 6 percent and the firm needs 400,000 flour sacks a year, what is the net present value of the equipment? A) -$28,126 B) $31,520 C) $29,926 D) -$45,852