If the marginal profit from increasing output by one unit is negative, then to attain an optimum the firm should
a. increase output until marginal profit equals zero.
b. reduce output until marginal profit equals zero.
c. increase output until marginal profit is maximized.
d. reduce output until marginal profit is maximized.
b
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If production of an item results in negative external costs, then
A) the market price is below the socially preferred price that reflects the external costs. B) the market price is above the socially preferred price that reflects the external costs. C) market forces will always correct the problem. D) the market quantity is too low from society's point of view.
In the figure above, if Mac and Izzie both completely specialized and traded with one another, their joint output would be
A) 3 computers and 3 TV sets per month. B) 6 computers and 6 TV sets per month. C) 12 computers and 12 TV sets per month. D) 24 computers and 24 TV sets per month.
In the Keynesian model with a fixed money wage but a flexible price level, an increase in taxes will lower
a. output and the price level, but leave the interest rate unchanged. b. output, the price level and the interest rate. c. output and the interest rate, but leave the price level unchanged. d. output and the price level, but increase the interest rate. e. the price level and the interest rate, but leave output unchanged.
The market power for a firm in the Cournot model will be greater
A) if the market demand is more elastic. B) if there are fewer firms in the industry. C) if market demand is higher. D) the more output this firm produces.