Refer to the graph shown. There is a $.010 per-gallon marginal cost external to the trade associated with the use of gasoline. Assuming that gasoline is sold in perfectly competitive markets, the market equilibrium price will be:
A. $1.10.
B. $1.05.
C. $1.00.
D. $0.95.
Answer: C
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Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3% percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of
A. opportunity costs. B. imperfect information. C. marginal benefits that exceed marginal costs. D. normative economics.
The author of the book An Inquiry into the Nature and Causes of the Wealth of Nations is
A) Thorstein Veblen. B) Adam Smith. C) Milton Friedman. D) Alan Greenspan.
The law of demand states that
A) people demand less at lower prices. B) the quantity demanded is directly related to price. C) the quantity demanded is inversely related to price. D) changes in price and changes in quantity demanded move in the same direction.
Refer to the information provided in Figure 9.2 below to answer the question(s) that follow.
Figure 9.2Refer to Figure 9.2. If demand for wheat is D3, then a profit-maximizing firm will produce ________ units and earn ________.
A. 9; positive profits B. 13; exactly a normal return C. 15; positive profits D. 12; negative profits