Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that we observe Joe staying open 6 hours per day. If he is following the marginal principle, what must his marginal cost per hour be?
A. $16
B. $24
C. $32
D. $48
Answer: B
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In the Keynesian framework, as long as output is ________ the equilibrium level, unplanned inventory investment will remain ________, firms will continue to lower production, and output will continue to fall
A) below; negative B) above; negative C) below; positive D) above; positive
Suppose a monopoly produces film and cameras. Consumers demand pictures, which require film and one camera
Two different types of consumers have the following demand for film, qA = 100 - 10p and qB = 80 - 10p. The monopoly cannot price discriminate in the market for film or the market for cameras, but it can bundle the products. The monopoly produces film at a constant marginal cost of $1 per roll. What price will the monopoly set for film and for cameras?
For a particular competitive firm, the minimum value of average variable cost (AVC) is $12 and is reached when 200 units of output are produced. For the same firm, the minimum value of average total cost (ATC) is $15 and is reached when 230 units of output are produced. Which of the following statements is correct?
a. In the short run, the firm will shut down if the price of its product is $14. b. In the long run, the firm will shut down if the price of its product is $11. c. For this firm, the minimum value of variable cost (VC) is $2,400. d. If the firm's fixed cost (FC) amounts to $500, then the firm cannot earn a positive profit unless the price of its product exceeds $16.
What are the three externalities that are associated with driving cars and trucks?