Adherence to marginal cost pricing in Figure 27.1 will require
A. Setting minimum output at Q2.
B. Giving the firm a subsidy.
C. Regulation of the firm's profits.
D. Taxing away the economic profits that will be realized.
Answer: B
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Hudson has two job offers when he graduates from college. Hudson views the offers as identical, except for the salary terms. The first offer is at a fixed annual salary of $45,000. The second offer is at a fixed salary of $25,000 plus a possible bonus of $40,000. Hudson believes that he has a 50-50 chance of earning the bonus. If Hudson takes the offer that maximizes his expected utility and he is risk-loving, then
A. he will take the first offer. B. he will take the second offer. C. he is indifferent between the offers-both yield the same expected utility. D. Indeterminate from the given information-we cannot say what he will do.
All of the following can be true about the optimal basket consumed by a consumer, except
a. The basket is on the budget line. b. The person is spending all of their money on the basket. c. The basket is on the highest indifference curve. d. The budget line is tangent to an indifference curve at the optimal basket.
The long-run average cost curve is the
A) change in total product divided by the change in capital when the quantity of labor is constant. B) change in output resulting from a one-unit increase in the quantity of capital. C) relationship between the lowest attainable average total cost and output when both the plant size and labor are varied. D) relationship between the lowest attainable average total cost and output when both the plant size and labor are fixed.
In comparing the traditional way of structuring mortgages and the newer structure of providing mortgages that securitized them and insured those securities with credit-default swaps, it is clear that the ________ structure allowed more people to afford homes and that the ________ structure was safer to the health of the overall economy.
A. traditional; newer B. newer; newer C. newer; traditional D. traditional; traditional