Suppose that once a well is dug, water flows out of it continuously without any additional effort. Customers collect their water and pay a per gallon fee when they leave the site of the well. In the short run, the competitive firm in this market
A) will not shut down because variable costs are zero.
B) has no fixed costs.
C) faces diminishing marginal returns.
D) can act as a price setter.
A
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In the economic way of thinking, a rise in the real output of final goods and services can be associated with
A) a fall in the price level. B) a rise in nominal GDP. C) a rise in the price level. D) a fall in nominal GDP. E) any of the above.
A critical assumption in economist A. P. Lerner's theory explaining why society's total utility is maximized with income equality is
a. there is no "level playing field" in people's choice of employment b. people have identical utility functions c. the rich earn their income by exploiting the poor d. people have equal skills if given equal opportunity e. the law of diminishing marginal utility does not apply to money
The problem of limited and bundled choice in the political process tends to
1. The problem of limited and bundled choice in the political process tends to a. increase economic efficiency, because politicians choose programs with positive and negative net benefits. b. reduce economic efficiency, because politicians choose programs with positive and negative net benefits. c. increase economic efficiency, because politicians choose programs with average net benefits. d. reduce economic efficiency, because politicians choose programs with average net benefits. 2. Public bureaucracies are possibly less efficient than business firms because a. the private market is driven by profit, but this competitive force does not operate in public bureaucracies. b. the private market has more resources than public bureaucracies. c. the private market has access to better technologies than public bureaucracies. d. workers in public bureaucracies have less supervision and shirk their responsibilities.
The pricing rule MR=MC hold for
a. All firms b. Single product firms c. Multiple product firms d. None of the above