If the price of an input falls, a firm would increase the use of that input for two reasons:
a. the input is now more productive, and the firm can substitute this input for other relatively more expensive inputs.
b. the input is now more productive, and overall production costs are now lower, meaning a firm may choose to increase production.
c. overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs.
d. overall production costs are now lower and the firm will have more of other inputs to use with the one in question.
c
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In a perfectly competitive market with identical firms, all surplus will be consumer surplus in long run equilibrium.
Answer the following statement true (T) or false (F)
Which of the following conditions is necessary in order for the private market to efficiently solve an externality problem?
a. The person who creates the externality must have the legal right to do so. b. The person harmed by the externality must have a legal right to be compensated. c. The value of any side payment must be smaller than the marginal cost of producing the externality. d. The value of any side payment must be smaller than the marginal cost of creating the externality. e. Side payments must be arranged without cost.
Government can raise GDP by $1,000 billion by:
a. raising government purchases b. reducing taxes c. increasing transfer payments d. All of the above.
When Ryan has an income of $2,000 . he consumes 30 units of good A and 50 units of good B. After Ryan's income decreases to $1,500, he consumes 23 units of good A and 55 units of good B. Which of the following statements is correct?
a. Both goods A and B are normal goods. b. Both goods A and B are inferior goods. c. Good A is a normal good, and good B is an inferior good. d. Good A is an inferior good, and good B is a normal good.