Deadweight loss
A. can result from underproduction, but not from overproduction.
B. can result from overproduction, but not from underproduction.
C. is measured as the combined loss of consumer surplus and producer surplus.
D. results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price.
Answer: C
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The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The average variable cost of producing 10 baseball hats per hour is
A) $1. B) $2. C) $20. D) More information is needed to answer the question.
The numerical value of the MPC is typically
A. less than 1. B. equal to 1. C. greater than 1. D. unpredictable.
If the demand for a good increases, it is likely that the demand for the factors of production used as inputs will:
A. decrease. B. increase. C. stay the same. D. None of these statements is true.
When building a model, an economist must:
A. adjust for exceptional situations. B. provide a complete description of reality. C. make simplifying assumptions. D. develop a set of behavioral equations.