If the market price is $40 in a perfectly competitive market, the marginal revenue from selling the fifth unit is
A) $8. B) $20. C) $40. D) $200.
C
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Lolita wants to purchase a beautiful art deco office building built in the 1920s, tear it down, and construct a rather bland, glass-and-steel office building that will confer $2 million of benefits to society. In its current state, the art deco office building is worth $1.7 million. Lolita goes to the city council with her proposal and tells the council members that the new office building will hold more tenants and therefore increase employment and tax revenues. If the city council agrees to use eminent domain to allow Lolita to proceed with her project, society as a whole will
A) be made poorer since eminent domain is a costly process. B) be made poorer since the area will be less aesthetically beautiful. C) be made richer since the project confers benefits that are greater than the current value of the art deco office building. D) not be affected since the project only encompasses one small parcel of land.
Assume that both the goods and the labor market are perfectly competitive. If at equilibrium, the marginal cost faced by a firm is $6 and the marginal product of the last unit of labor hired by the firm is 2 units, the market wage rate must be:
A) $3. B) $6. C) $12. D) $18.
If the Fed sterilizes the purchase of foreign assets,
A) the monetary base is left unchanged. B) the monetary base rises by the amount of the purchase. C) the monetary base falls by the amount of the purchase. D) the monetary base may rise, fall, or remain unchanged depending on the reaction of domestic interest rates to the purchase.
As the period for firms to expand output is lengthened, the elasticity of the market supply curve will:
a. approach zero. b. increase. c. decrease. d. remain the same since time does not affect the elasticity of market supply.