The figure below shows the demand for meals at lunch and dinner for a proposed new restaurant. Suppose the marginal cost of a meal (both lunch and dinner) is constant at $10 per meal and marginal cost of providing the capacity is constant at $5 per meal. Once the managers have determined the profit-maximizing capacity, at lunch they will serve ________ meals and set a price of ________ per meal.
A) 800; $30 B) 200; $20 C) 200; $30 D) 600; $30
B) 200; $20
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Technical progress will
a. shift a firm's production function and its related cost curves. b. not affect the production function, but may shift cost curves. c. shift a firm's production function and alter its marginal revenue curve. d. shift a firm's production function and cause more capital (and less labor) to be hired.
The Fisher effect
a. says the government can generate revenue by printing money. b. says there is a one for one adjustment of the nominal interest rate to the inflation rate. c. explains how higher money supply growth leads to higher inflation. d. explains how prices adjust to obtain equilibrium in the money market.
The concept that "there is no free lunch" reflects the notion that:
a. the benefit of certain "free" goods only accrues to society. b. unlimited resources are used to produce so-called "free goods" that are given up in order to produce the aforesaid "free" goods. c. scarce resources are used to produce so-called "free goods" that have alternative uses that are given up. d. even if your friend pays for your lunch, you'll have to repay the favor at a later time.
For a cartel to work, demand for the cartel's product must be
A. inelastic. B. unit elastic. C. perfectly elastic. D. elastic.