Refer to the graph shown of average costs for a typical firm. The per-unit cost of the industry would be $8 if:
A. one firm produced 500 units of output.
B. two firms produced 1,000 units of output each.
C. one firm produced 667 units of output.
D. two firms produced 250 units of output each.
Answer: A
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In order to effectively price discriminate, one requirement is that a seller must be able to:
A. identify customers with different reservation prices. B. reduce costs when producing the discounted item. C. resell the product. D. avoid detection because price discrimination is illegal.
Explain how a pollution tax is different from a Pigouvian tax. Discuss how incentives for firms differ under the two types of taxes, and what would be required of the government if it were to structure a Pigouvian tax system to mimic the effects of a pollution tax.
What will be an ideal response?
An uninsurable risk is one
a. where everyone wishes to bet on the same outcome. b. in which information is asymmetrically distributed. c. for which the odds of an event's occurrence cannot be accurately estimated. d. that cannot be diversified.
As a student, Anne spends 40 hours per week writing term papers and completing homework assignments. On one axis of her production possibilities frontier is measured the number of term papers written per week. On the other axis is measured the number of homework assignments completed per week. Anne's production possibilities frontier is a straight line if
a. she faces no trade-off between writing term papers and completing homework assignments. b. she can switch between writing term papers and completing homework assignments at a constant rate. c. the rate at which she can switch between homework assignments and term papers depends on the number of homework assignments she is completing and on the number of term papers she is writing. d. she is required by her professors to spend half of her time on term papers and the other half of her time on homework assignments.