Suppose a firm uses workers and office space to produce output. The firm is locked into a year-long lease on its office space, but it can easily vary the number of employee-hours it uses each day. The table below describes the relationship between the number of employee-hours the firm uses each day and the firm's daily output. Each unit of output sells for $2, the hourly wage rate is $14, and the rent on the office space is $50 per day.Employee-HoursPer DayOutputPer Day0014048091201516023200This firm's fixed cost each day is:
A. $66
B. $14
C. $64
D. $50
Answer: D
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Refer to Figure 7-5. Fenwick currently both produces and imports pistachios. The government of Fenwick decides to restrict international trade in pistachios by imposing a quota that allows imports of only 5 million pounds each year
Figure 7-5 shows the estimated demand and supply curves for pistachios in Fenwick and the results of imposing the quota. Answer questions a-j using the figure. a. If there is no quota what is the domestic price of pistachios and what is the quantity of pistachios demanded by consumers? b. If there is no quota how many pounds of pistachios would domestic producers supply and what quantity would be imported? c. If there is no quota what is the dollar value of consumer surplus? d. If there is no quota what is the dollar value of producer surplus received by producers in Fenwick? e. If there is no quota what is the revenue received by foreign producers who supply pistachios to Fenwick? f. With a quota in place what is the price that consumers of Fenwick must now pay and what is the quantity demanded? g. With a quota in place what is the dollar value of consumer surplus? Are consumers better off? h. With a quota in place what is the dollar value of producer surplus received by producers in Fenwick? Are domestic producers better off? i. Calculate the revenue to foreign producers who are granted permission to sell in Fenwick after the imposition of the quota. j. Calculate the deadweight loss as a result of the quota.
The positively-sloped part of the long-run average total cost curve is due to which of the following?
A) Diseconomies of scale. B) Diminishing returns. C) The firm being able to take advantage of large-scale production techniques as it expands its output. D) The increase in productivity that results from specialization.
When there is a divergence between social costs and private costs in a market, _____
a. the market will always provide an efficient allocation of resources b. there will be too much or too little production and consumption in the market c. there will be an acute shortage of goods and services in the market d. there will be an excess supply of goods and services in the market e. all resources are being used in their highest-valued activity