Marginal cost is:
a) Total revenue minus total cost.
b) The change in total costs because of a one-unit increase in output.
c) Total cost divided by the rate of output.
d) The average profit divided by the quantity sold.
Answer: b) The change in total costs because of a one-unit increase in output.
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High prices do not occur in laissez-faire markets.
Answer the following statement true (T) or false (F)
Bobby's neighbor is growing a tree that is blocking Bobby's ocean view. Bobby is considering taking his neighbor to court. To Bobby, the tree represents a(n)
a. unclear property right b. public good c. free-rider good d. positive externality e. negative externality
A legal system that provides secure private property rights and unbiased enforcement of contracts
a. is unnecessary for the smooth operation of markets. b. reduces the efficiency of markets. c. enhances the efficiency of markets. d. makes it easier for sellers to cheat or defraud consumers.
In a nation's balance of payments, which one of the following items is always recorded as a positive entry?
A. Goods imports. B. Changes in foreign currency reserves. C. U.S. purchases of assets abroad. D. Exports of services.