The minimum efficient scale of a firm:
A. is realized somewhere in the range of diseconomies of scale.
B. occurs where marginal product becomes zero.
C. is in the middle of the range of constant returns to scale.
D. is the smallest level of output at which long-run average total cost is minimized.
Answer: D
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An example of a perfectly competitive firm is
A) an oat farmer in the United States. B) the local cable TV company. C) a U.S. automobile producer. D) a big city newspaper.
Vineyards can grow either red wine grapes or white wine grapes on their land. Which of the following would cause the supply of red wine grapes to decrease?
A) an increase in the price of white wine grapes B) an increase in the demand for red wine grapes C) a decrease in the price of white wine grapes D) an increase in the price of red wine
The Bretton Woods Agreement
A) fixed the value of the U.S. dollar relative to gold. B) fixed the value of the U.S. dollar relative to the euro. C) required foreign central banks to hold certain minimum amounts of gold as foreign exchange reserves. D) required member nations, other than the United States, to disband their central banks.
If the government has enough knowledge about a market and the damage it causes through pollution, it can force the socially optimal output
A) through an emission fee. B) using a ban on pollution. C) by deregulating to eliminate the monopoly. D) All of the above.