Firms that produce an information product experience short-run economies of operation because
A) the firm will always produce in the decreasing portion of the marginal cost curve.
B) of the U-shaped nature of the average total cost curve.
C) of the U-shaped nature of the average variable cost curve.
D) the average total cost of producing and selling the product declines as output increases.
Answer: D
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Consider a mutual fund with a 6 percent back-end load that decreases to 0 percent in the seventh year. How much of the load will an investor have to bear if she sells it off in the seventh year?
a. 1 percent of the load b. 0 percent of the load c. 2 percent of the load d. 6 percent of the load e. 4 percent of the load
Differentiated goods are a feature of a:
A. perfectly competitive market. B. monopolistic market. C. monopolistically competitive market. D. monopolistically competitive market and monopolistic market.
Writing in the New York Times on the technology boom of the late 1990s, Michael Lewis argues, "The sad truth, for investors, seems to be that most of the benefits of new technologies are passed right through to consumers free of charge." What does Lewis
means by the benefits of new technology being "passed right through to consumers free of charge"? A) Firms in perfect competition are price takers. Since they cannot influence price, they cannot dictate who benefits from new technologies, even if the benefits of new technology are being "passed right through to consumers free of charge." B) In perfect competition, price equals marginal cost of production. In this sense, consumers receive the new technology "free of charge." C) In the long run, price equals the lowest possible average cost of production. In this sense, consumers receive the new technology "free of charge." D) In perfect competition, consumers place a value on the good equal to its marginal cost of production and since they are willing to pay the marginal valuation of the good, they are essentially receiving the new technology "free of charge."
In Figure 5-2, consumer’s surplus is measured by the area
A. ABC. B. OBCD. C. OACD. D. DCE.