According to the theory of comparative advantage; a good should be produced in that nation where
A. the production possibilities line lies further to the right than the trading possibilities line.
B. its cost is least in terms of alternative goods that might otherwise be produced.
C. its absolute cost in terms of real resources used is least.
D. its absolute money cost of production is least.
B. its cost is least in terms of alternative goods that might otherwise be produced.
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A firm is considering entering a market where demand for its product is Q = 100 - P. This demand function implies that the firm’s marginal revenue function is MR = 100 - 2Q. The firm’s total cost of producing the product for that market is TC = 500 + 10Q + Q2 which indicates that its marginal cost function is MC = 10 + Q. Indicate whether or not the firm should enter the market by calculating the firm’s profit (Hint: to find the price that the firm should charge, take the profit maximizing quantity and plug it into the demand equation). Describe how your previous answer would change if the firm’s total cost function became TC = 1000 + 10Q + Q2.
What will be an ideal response?
Because of the flaws of the concentration ratio as a measure of the extent of competition in an industry, some economists prefer another measure of competition, the Herfindahl-Hirschman Index
Indicate whether the statement is true or false
Refer to Figure 28-2. At which point are inflation expectations equal to the actual inflation rate?
A) A B) B C) C D) all of the above
A short run total cost schedule is a _________ cost schedule shifted upward by the amount of ________ cost.
A) total fixed; marginal B) marginal; total variable C) total variable; total fixed D) total variable; marginal