Answer the following statements true (T) or false (F)
1) All else equal, firms with a few large plants are more likely to have lower average costs than firms with many small plants.
2) A plant is located at the cost-minimizing location when the marginal benefit of moving closer to the inputs is exactly double the marginal cost of moving closer.
3) If a firm is not directly paying all of the transportation costs, managers still have an incentive to minimize the sum of the production and transportation costs.
4) If a firm has two plants, one in a desirable location and one in an undesirable location, workers located in the desirable location are likely to be paid more.
5) If a firm has two plants and workers at Plant 1 are paid $40,000 a year and workers at Plant 2 are paid $45,000, the $5,000 difference in salary is a compensating wage differential.
1) TRUE
2) FALSE
3) TRUE
4) FALSE
5) TRUE
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If autonomous planned spending increases by $1 million and s = 0.2 and t = 0.1, then equilibrium income increases by
A) $5 million. B) $3.33 million. C) $3.57 million. D) $2.90 million.
In the real world, it is likely that wage negotiations:
A. drag on for years to see which side is more patient. B. often end with the company enjoying a larger payoff, since they can afford to be more patient. C. often end with the worker's enjoying a larger payoff, since they are not losing as much in profit as the company. D. do not drag on for years.
"The economic wealth of this country is primarily the result of the profit made by some individuals at the expense of others." The person who made this statement
a. has failed to comprehend that mutual gains result from specialization and exchange. b. has failed to comprehend the fallacy of composition. c. has failed to understand the significance of the production possibilities constraint. d. has utilized the economic way of thinking; the statement is essentially correct.
Companies will often spend considerable amounts of money to create a ________with respect to their brand name.
A. reputation effect B. product orientation C. relational effect D. market effect