Is the cost of an all-volunteer army in the United States higher or lower than the cost of a conscripted (drafted) army?
A) Higher, unless the citizens are exceptionally patriotic
B) Lower, unless the army is inefficiently managed
C) Higher to taxpayers but lower to military personnel
D) The same because the wage will move to the market-clearing level
E) We cannot say without knowing the supply of and demand for military personnel.
C
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When a tax on output is imposed to internalize the external costs of pollution, the supply curve shifts down by the amount of the tax
Indicate whether the statement is true or false
The figure below shows a firm that has two plants. Plant 1 has a marginal cost curve of mc1, plant 2 has a marginal cost curve of mc2, and the overall marginal cost curve is MC. When the managers maximize profit, the marginal cost in plant 1 is ________ and the marginal cost in plant 2 is ________ .
A) $160; $150
B) $80 per unit; $80 per unit
C) $120; $100
D) None of the above answers is correct.
When marginal cost is less than average total cost, ________ as output increases.
A. average variable cost must be decreasing B. average total cost must be decreasing C. average fixed cost must be increasing D. average total cost must be increasing
Suppose a new cost-saving device will forever generate $1,000 net savings per year to a firm. The device costs $10,000. Using the Internal Rate of Return approach, will the firm make the investment?
A) definitely B) definitely not C) if the interest rate exceeds 10% D) if the interest rate is less than 10%