Refer to Table 8.1. Assuming the price of labor (L) is $5 per unit and the price of capital (K) is $10 per unit, the marginal cost of producing the third unit of output is
A) $30.
B) $40.
C) $50.
D) indeterminate from this information.
B) $40.
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Charlie is willing to pay $10 for a T-shirt that is priced at $9. If Charlie buys the T-shirt, then his consumer surplus is
A. $19. B. $0.90. C. $1. D. $90.
Heavy business taxes
(a) vary according to firm size. (b) benefit small firms but cost large ones. (c) stifle entrepreneurial activity. (d) can be described by all of the above.
When economists use the term "ceteris paribus," they mean that: a. the causal relationship between two economic variables cannot be determined. b. the analysis is true for the individual but not for the economy as a whole
c. all other variables except the ones specified are assumed to be constant. d. their conclusions are based on normative rather than positive economic analysis.
According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of
a. fluctuations in aggregate demand. b. the "animal spirits" of private investors. c. excessive credit expansion and artificially low interest rates that trigger malinvestment. d. the unwillingness of political decision-makers to follow the advice of macroeconomists who know how to alter fiscal policy in a manner that would virtually eliminate the ups and downs of the business cycle.