Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand increases from D0 to D1, in the short run:
A. market price rises from P0 to P1 and the firm's output rises from q0 to q1.
B. market price remains at P0 because perfectly competitive firms can't earn positive economic profit.
C. the firm's output remains at q0 because perfectly competitive firms can't earn positive economic profit.
D. market price rises from P0 to P1 and the firm's output rises from Q0 to Q1.
Answer: A
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Define the following terms:
a) Indifference curve b) Utility
Refer to the above table. If the price of the good produced is $7, the marginal revenue product of the 11th worker is
A) $700 B) $4200 C) $630 D) $3500
Economists are often required to make unrealistic assumptions concerning the problems they are investigating.
Answer the following statement true (T) or false (F)
The market system does not produce public goods because
A. there is no need or demand for such goods. B. public enterprises can produce such goods at lower cost than can private enterprises. C. their production seriously distorts the distribution of income. D. private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them.