Increasing marginal returns always occurs when the
A. average product of an additional worker is less than the average product of the previous worker.
B. marginal product of an additional worker exceeds the average product of the previous worker.
C. average product of an additional worker exceeds the average product of the previous worker.
D. marginal product of an additional worker exceeds the marginal product of the previous worker.
E. marginal product of an additional worker is less than the marginal product of the previous worker.
Ans: D. marginal product of an additional worker exceeds the marginal product of the previous worker.
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Which of the following activities creates a negative externality?
A) cleaning up a public garden in your neighborhood B) graduating from college C) keeping an old refrigerator on your front porch D) using a pooper-scooper every time you walk your dog
For a single-price monopolist,
A) MR = P. B) MR < P. C) MR first increases and then decreases with the quantity sold. D) MR first decreases and then increases with the quantity sold.
Refer to the above figure. The market equilibrium quantity is Q1. Point Q2 represents the optimal amount of production. The government can achieve the optimal outcome by
A) setting the price at P3. B) providing a per-unit subsidy to consumers equal to P3 - P1. C) providing a per-unit subsidy to consumers equal to P2 - P1. D) establishing a tax equal to P2 - P1 per unit of the good sold.
Of the curves displayed in the graph shown, what does curve B most likely represent?
A. Average variable cost B. Marginal cost C. Average fixed cost D. Average total cost