Explain the difference between intermediate goods and final goods and give an example of each.
What will be an ideal response?
Final goods are goods that are ready to be consumed. Intermediate goods are those sold from producer to producer. They become an input into the production of a final good. An example of a final good is a new car purchased by a consumer at a car dealership. An example of an intermediate good is the tires that the car manufacturer purchased from the tire manufacturer and placed on the car during assembly.
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Suppose that you are given a cost function c(w,r,x)=2w1/2r1/2x3/2 where w is the wage rate for labor, r is the rental rate of capital and x is the output level. a. Does the production process that gives rise to this cost function have increasing, decreasing or constant returns to scale? b. Derive the marginal cost function. c. Calculate the supply function for the firm - i.e. the function that tells us for every combination of input and output prices, how much the firm will optimally produce. How does output by the firm change as input and output prices change? d. If the cost function had been c(w,r,x)=2w1/2r1/2x1/2 instead, how would your answer to (c) change? How can that make any sense?
What will be an ideal response?
The financial statement that sums up a firm's revenues, costs, and profit over a period of time is its
A) income statement. B) dividend yield statement. C) price-earnings statement. D) balance sheet.
Wheat is being grown and sold at the lowest possible average cost. Which of the following does this situation illustrate?
a. Productive efficiency b. Market elasticity c. Allocative efficiency d. Perfect competition
Scarcity forces society to confront three critical issues. List those issues and explain how they are related to the problem of scarcity.
What will be an ideal response?