The figure above shows the demand and cost conditions for a firm with two plants. How should the firm allocate total output between the two plants in order to maximize profit?
A. produce 30 units in plant 1, 20 units in plant 2
B. produce 10 units in plant 1, 20 units in plant 2
C. produce 40 units in plant 1, 40 units in plant 2
D. produce 40 units in plant 1, 50 units in plant 2
E. produce 55 units in plant 1, 60 units in plant 2
Answer: B
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Economists measure the output of an economy by
Fill in the blank(s) with the appropriate word(s).
The overwhelming unpopularity of inflation among citizens is largely a result of the fact that
A) inflation raises the real cost of such basic necessities as food, housing, and clothing. B) inflation reduces the value of real wealth. C) no one knows what causes it. D) no one (or almost no one) gains from inflation. E) people who gain from inflation often erroneously conclude that they are losing as a result of it.
An assumption that affects a model in important ways is
a. a key step b. a simplifying assumption c. a bad assumption, one that should be avoided in economic theory d. a critical assumption e. one that should be replaced with empirical evidence
An open economy produces most of the goods and services that it needs, with few imports and exports
a. True b. False Indicate whether the statement is true or false