Answer the following questions true (T) or false (F)
1. The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit.
2. Optimal decisions are made at the point where marginal cost equals zero.
3. If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets, then the difference of $120 is the marginal cost of producing the 4th suede jacket.
1. TRUE
2. FALSE
3. TRUE
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Suppose that the government spends more on a missile defense program. What does this do to aggregate demand? How is your answer affected by the presence of the multiplier, crowding-out, taxes, and investment-accelerator effects?
Compared to their percentage shares in 1968, over the next 40 years, the percentage shares of each of the lowest four quintiles
A. rose substantially. B. rose somewhat. C. stayed about the same. D. declined.
Which of the following is true about a differentiated-product Bertrand duopoly?
A. Firm 1 and firm 2's prices will equal marginal cost. B. Firm 1 and firm 2's prices will exceed marginal cost. C. Firms in a differentiated-product Bertrand duopoly cannot earn positive economic profits in the long run. D. Firm 1's price will always be above marginal cost, while firm 2's price will be equal to marginal cost.
The market for gasoline in May is in equilibrium, at a market clearing price of $2.50 per gallon. After Memorial Day, the demand curve for gasoline increases, which causes
A) the demand curve for gasoline to shift to the right, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to rise. B) the demand curve for gasoline to shift to the right, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to fall. C) the demand curve for gasoline to shift to the left, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to rise. D) the demand curve for gasoline to shift to the left, creating a shortage at $2.50 per gallon which causes the market clearing price of gasoline to fall.