A market is allocatively efficient if
A) the sum of the consumer surplus and the producer surplus has been maximized.
B) consumer surplus has been maximized.
C) producer surplus has been maximized.
D) profit has been maximized.
A
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Refer to the budget line shown in the diagram above. If the consumer's money income is $20, the:
A) prices of C and D cannot be determined. B) price of C is $2 and the price of D is $4. C) consumer can obtain a combination of 5 units of both C and D. D) price of C is $4 and the price of D is $2.
A linear specification, Q = aK + bL, is not appropriate for estimating a production function because
A. the firm could produce positive levels of output at zero cost. B. the marginal products of the inputs are assumed constant. C. it does not allow the firm to substitute capital for labor. D. both b and c E. all of the above
If the marginal physical product of the fourth acre of land used were 10, the MPP of the fifth acre were 6, the MPP of the sixth acre were 2, the MPP of the seventh acre were 0, and the MPP of the eighth acre were -3, what is the maximum number of acres of land that would be used?
A. 4 B. 5 C. 6 D. 7
Margin calls are more likely to happen when markets are:
A. irrational. B. crashing. C. booming. D. stable.