What is meant by the marginal rate of transformation?
What will be an ideal response?
The marginal rate of transformation is the slope of the production possibility frontier. It is the ratio of the change in the good (or service) on the y-axis to the change in the good (or service) on the x-axis.
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Suppose you own a store that sells top-of-the-line MP3 players. You have determined that the demand function for your MP3 players is Qd = D(P) = 1200 - 4P. At what price would you sell the MP3 players if you wanted to sell 100 of them?
A. $250 B. $275 C. $280 D. $300
Physical capital
a. Land materials ...trees b. The stock of equipment and building that used to produce goods and service
In Figure 5.8, if the supply curve moves from S4 to S5,
A. the firm will make a smaller economic profit than they used to. B. the firm will go from making a loss to a bigger loss but one that is not big enough to make it want to shutdown. C. the firm will go from making an economic profit to a normal profit. D. the firm will go from making a loss to a bigger loss that is big enough to make it want to shutdown.
Which form of price regulation increases consumer well-being and allows the firm to stay in business?
A. Allow the firm to set its own rate of return. B. Set prices equal to marginal cost. C. Set prices equal to average cost. D. Set lower prices when efficiency improves.