The output expansion effect of the sale of a firm's last ?Q units of output is:
A. the additional revenue from selling ?Q units at price P(Q).
B. the reduced revenue from selling (Q - ?Q) units at a lower price of P(Q).
C. the additional revenue from selling ?Q units at price P(Q + ?Q).
D. the reduced revenue from selling (Q - ?Q) units at a lower price of P(Q - ?Q).
A. the additional revenue from selling ?Q units at price P(Q).
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Suppose the market clearing price for apples rises from $2.00 to $3.00 per pound, and the overall market clearing output increases from 1 million to 2 million pounds. How can we explain the increase in price and increase in market output?
A) Supply increased and demand remained unchanged. B) Supply decreased and demand decreased. C) Demand increased and supply remained unchanged. D) None of the above.
In a competitive market equilibrium:
A) social surplus is minimized. B) all the gains from trade are not realized. C) there is Pareto efficiency. D) all the firms earn positive economic profits.
In the long run, perfectly competitive firms cannot earn an economic profit
Indicate whether the statement is true or false
Zach Greinke's marginal product as a baseball player would be about the same as a Los Angeles Dodger and a Kansas City Royal. Why were the Dodgers willing to pay Greinke a higher salary than he was paid as a Royal?
A) The Dodgers needed a superstar to attract fans to their games. The Royals had no need to attract fans to their games. B) The owner of the Dodgers was under more pressure from the fans and the Los Angeles media to pay Greinke a higher salary than the Royals were willing to pay. C) The Dodgers play more home games than the Royals. As a result, the Dodgers earn more revenue from ticket sales that they can use to pay player salaries. D) Greinke's marginal revenue product is higher as a Dodger than it was as a Royal.