As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future, and how much to extract, an equilibrium arises when:
a. the cost of extracting such resources is equal to its price.
b. the rate of return for such resources equals the rate of interest on alternative uses of the funds.
c. the cost of extracting such resources is equal to the price of the commodity using these resources.
d. the price of such resources is equal to the rate of interest of bank accounts and other interest-bearing investments.
e. the rate of return on alternative investments is equal to the cost of extracting such resources.
b
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The larger the diameter of a natural gas pipeline is, the lower is the average total cost of transmitting 1,000 cubic feet of gas 1,000 miles. This is an example of one reason for
A. constant returns to scale. B. economies of scale. C. diminishing returns to scale. D. diminishing marginal returns.
Collective bargaining by unions can result in a union wage rate that is ________ the equilibrium real wage rate and creates a ________ of labor
A) below; shortage B) above; shortage C) below; surplus D) above; surplus E) equal to; surplus
When all the costs and benefits of a transaction are borne by the participants of that transaction, _____
a. the market outcome will be inefficient b. the private costs and social costs are identical c. negative externalities exist d. positive externalities exist e. the free rider problem arises
According to the principle of marginal productivity, if
A. the product price is less than MRP, the firm is using too little of the input. B. the price of an input rises, the quantity demanded of the input will increase. C. MRP is greater than product price, the firm should reduce the use of the input. D. price of the input equals MRP, the firm is maximizing profit.