Marginal cost is the:
A. rate of change in total fixed cost that results from producing one more unit of output.
B. change in total cost that results from producing one more unit of output.
C. change in average variable cost that results from producing one more unit of output.
D. change in average total cost that results from producing one more unit of output.
Answer: B
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Free riding
A) is possible if the consumption of a good is characterized by excludability. B) is possible if the consumption of a good is characterized by nonexcludability. C) is characteristic of private goods. D) occurs when consumers pay too much for services provided by government.
The long run is best defined as:
A. a period of time sufficiently long that at least one factor of production is fixed. B. the period of time between annual accounting reports. C. a period of time sufficiently long that all factors of production are variable. D. one year or more.
When analyzing the impact of government consumption and taxes in an open economy, we assume that:
a. the reasons for changing fiscal policy are not important. b. government deficits are a problem for the domestic and international economy. c. governments always have a balanced budget. d. governments often do not coordinate their tax and spending policies with those of other nations.
The total variable cost curve
A) increases as output increases. B) shows the variable cost of production given current factor prices. C) starts at the origin. D) All of the above