What is the relationship between a perfectly competitive firm's marginal cost curve and its short-run supply curve?
What will be an ideal response?
The marginal cost curve of a perfectly competitive firm is the firm's short-run supply curve at the point where price is equal to or greater than average variable cost. To determine its quantity supplied, the firm equates the price of its product with its marginal cost.
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"Compensating wage differentials" arise because:
a. workers possess different skills. b. workers prefer the characteristics of some to those of others. c. firms pay higher wages for workers with higher marginal productivities. d. firms discriminate in hiring.
A resource's earnings are all economic rent when the resource has no alternative uses
a. True b. False
Suppose two economies, the United States and Saudi Arabia, each have a GDP of $1,000 . A U.S. war effort involves the purchase of $100 of Saudi oil, which is financed by selling $100 worth of U.S. government bonds to Saudi Arabia. In subsequent years, GDP remains at $1,000 for each country and the United States imposes a $10 tax to make its debt payments to the Saudis. Now while the United States
is still debt obligated, a. U.S. consumption is $1,000 and Saudi consumption is $1,000 b. U.S. consumption is $990 and Saudi consumption is $990 c. U.S. consumption is $1,010 and Saudi consumption is $990 d. U.S. consumption is $1,000 and Saudi consumption is $1,010 e. U.S. consumption is $990 and Saudi consumption is $1,010
Suppose you have an option that gives you a lifetime income of $75,000 or a graduated income that begins at $30,000 and ends at $120,000 with the exact same present value. Which of the following would be true?
A. The second choice is generally preferred because the steadily improving income brings some pleasure. B. Based on purely rational choice assumptions you should prefer the first choice. C. There is no reason to believe either choice is preferred so you would be indifferent between the two options. D. The first choice is preferred because no one likes low income years.