The relationship Q = f(K, L) is an example of a
A) cost function.
B) production function.
C) demand equation.
D) profit equation.
Answer: B
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Suppose the price of gasoline in July 2004 averaged $1.35 a gallon and 15 million gallons a day were sold. In October 2004, the price averaged $2.15 a gallon and 14 million gallons were sold
If the demand for gasoline did not shift between these two months, use the midpoint formula to calculate the price elasticity of demand. Indicate whether demand was elastic or inelastic.
The marginal revenue product of labor declines as the number of workers increases because
A) firms hire the most efficient workers first and the least efficient workers last. B) firms must lower prices for the final product when they want to sell more units. C) of the law of diminishing marginal product. D) of diseconomies of scale.
The more elastic the demand curve, the smaller is the deadweight loss resulting from the imposition of a tax
a. True b. False Indicate whether the statement is true or false
The demand for salt is inelastic, and the supply of salt is elastic. The demand for caviar is elastic, and the supply of caviar is inelastic. Suppose that a tax of $1 per pound is levied on the sellers of salt, and a tax of $1 per pound is levied on the buyers of caviar. We would expect that most of the burden of these taxes will fall on
a. sellers of salt and the buyers of caviar. b. sellers of salt and the sellers of caviar. c. buyers of salt and the sellers of caviar. d. buyers of salt and the buyers of caviar.