From 1998 to 2010, the cost of building a nuclear plant increased from $3 billion to $10 billion. If the marginal cost of producing electricity stays the same, then the average fixed cost of producing electricity ________ while the average total cost of producing electricity ________.
A. increases; increases
B. decreases; stays the same
C. increases; stays the same
D. decreases; increases
Answer: A
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When the use of a communally owned resource has no price, then people will
A. use too much of this resource. B. use less of the resource than usual. C. use another resource altogether. D. not use this resource.
Answer the following statement(s) true (T) or false (F)
1. Diminishing marginal returns is basically the same concept as decreasing returns to scale.. 2. The unit isoquant represents all possible ways of producing one unit. 3. If the wage and rental rates are $10 and $50 per hour respectively and an additional worker could produce 100 units of output in an hour, then an extra unit of capital could produce 500 units of output in an hour. 4. If the marginal product of labor is currently 40 units per hour and the marginal product of capital is currently 20 units per hour, then workers must be getting paid twice as much as capital per hour. 5. If all inputs are variable in the long run, then there cannot be decreasing returns to scale. But if some inputs remain fixed in the long run, then decreasing returns to scale can occur.
When production efficiency does NOT occur,
i. an economy is producing at a point within its PPF. ii. there are unemployed resources. iii. allocative efficiency cannot occur. A) i only B) i and ii C) iii only D) i and iii E) i, ii, and iii
Carvel advertises a football-shaped ice cream cake for $7; you can buy a second one for only $4 . What do they know about consumer preferences?
a. Consumers would never buy a second ice cream cake. b. Two cakes are worth less to the consumer than one. c. Marginal utility of ice cream cakes diminishes. d. Consumers only value the first cake at $4. e. Consumers value all cakes they eat at $4.