Constant returns to scale exist when long-run average costs:
A. decrease as output is increased.
B. increase as output is increased.
C. remain constant as output is increased.
D. None of the statements is correct.
Answer: C
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Refer to the accompanying figure. Suppose the solid line shows the current demand for coffee. In response to a news story explaining that coffee causes heart disease, you should expect:
A. neither a change in quantity demanded nor a shift in demand. B. the demand curve to shift to D(B) in anticipation of higher future prices. C. the demand curve to shift to D(A) because some people will stop drinking coffee. D. the quantity of coffee demanded to decrease, but no shift in the demand curve.
A computer you are considering for your business would add $4,000 per year to your profit. It would cost $400 a year to buy a complete maintenance contract so that you would never have repair and upkeep expense. The obsolescence depreciation is 25% a year. The going market interest rate is 5%. Assume all costs and revenue occur at the end of the year. What is the maximum you should be willing to pay for the machine?
What will be an ideal response?
Why does a prisoner's dilemma lead to a noncooperative equilibrium?
A) because each player had agreed before the game started to minimize the harm that he can inflict on the other players B) because each player is uncertain how other players will play the game C) because players must choose from a limited number of non-dominant strategies D) because each rational player has a dominant strategy to play a certain way regardless of what other players do
The fact that the fourth plate from the "All You Can Eat Country Buffet" generated more satisfaction than the fifth plate is an example of
A) increasing marginal utility. B) diminishing marginal utility. C) diminishing total utility. D) the "paradox of value."