Exhibit 6-10 Short-run cost schedule for book publisher's hourly production
TotalOutput
TotalVariable Cost
TotalCost
0 cases of books
$ 0
$200
1
100
300
2
150
350
3
250
450
4
450
650
In Exhibit 6-10, the average variable cost of producing 2 cases of books is:
A. $50 per case.
B. $75 per case.
C. $100 per case.
D. $150 per case.
Answer: B
You might also like to view...
In the above figure, along which range would the demand for this good be most elastic?
A) between point a and point b B) between point c and point d C) between point d and point e D) at point e
Suppose that it would cost a firm $9 million to develop a new drug. In the absence of a patent, other firms will be able to copy and bring to market a generic equivalent of the drug in three years. In each of these three years, the firm would earn monopoly profits of $4 million. A patent will generate monopoly status for the firm for twenty years. If the government knew this information ahead of time, which of the following is most correct?
A. The government should grant a patent to the firm, because the firm would not produce the drug at all without a patent. B. The government should grant a patent to the firm, because it does not have the resources to determine on a case-by-case basis exactly which inventions merit award of the patent. C. The government should grant a patent to the firm, because even with a patent the firm will not earn a monopoly profits. D. The government should not grant a patent to the firm, because the firm would earn sufficient profits to develop the drug without the patent.
The real-income effect shows that
A. a decrease in the price of a good increases the purchasing power of the consumer's income. B. when the price of a good rises, consumers are able to buy more of other goods because of the increase in the purchasing power of income. C. if a good is inferior, a decrease in the purchasing power of income results in less of the good being consumed. D. if the consumer's income rises, he or she buys more of inferior goods and less of normal goods.
If a doctor knows that an insurance company will pay for most of a patient's bill, the doctor has more of an incentive to require additional medical procedures and tests, even if the patient may not require them. This is an example of
A) moral hazard. B) the principal-agent problem. C) asymmetric information. D) adverse selection.