Which of the following are the rules for finding the point of allocative efficiency?
A) Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible.
B) Produce on the PPF and then produce where marginal benefit equals marginal cost.
C) Produce on the PPF and then produce where marginal benefit and marginal cost are constant.
D) Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible.
E) Produce anywhere on the PPF.
B
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Assume that currently one U.S. dollar will purchase £0.65. Investors believe that one year from now a U.S. dollar will purchase £0.72. If we consider the U.S. dollar-pound market, where the horizontal axis measure the quantity of pounds, explain what we are likely to see in terms of demand and supply and the exchange rate.
What will be an ideal response?
The most significant difference between perfect competition and monopolistic competition is that
A) in a perfectly competitive market products are differentiated, while in a monopolistically competitive market products are homogeneous. B) in a perfectly competitive market products are homogeneous, while in a monopolistically competitive market products are differentiated. C) in a perfectly competitive market there is a large number of sellers, while in a monopolistically competitive market there is a small number of sellers. D) in a perfectly competitive market there is a small number of sellers, while in a monopolistically competitive market there is a large number of sellers.
Publicly traded companies are required by law to pay out their profits to shareholders in payments called dividends.
Answer the following statement true (T) or false (F)
If demand is represented as Qd = 24 - P and supply is represented as Qs = 6 + 2P, the equilibrium price is
A. $3. B. $6. C. $10. D. $18.