As an economy moves from point to point along its production possibilities curve, which one of the following variables changes?
A) the total amount of resources employed
B) the level of technology
C) the level of efficiency of some factors of production
D) the amount of each good or service produced
Answer: D
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If a monopoly wants to sell a larger quantity, it must
A) set a higher price. B) maintain the current price. C) set a lower price. D) implement new technology. E) increase the barrier to entry that protects it.
Suppose capital and labor are perfect complements in production. For output levels between 0 and 100, 2 units of labor together with 1 unit of capital produce 1 unit of output; for output levels between 100 and 200, 1 unit of labor together with 1 unit of capital produces 1 unit of output; and for output levels above 200, 1 unit of labor together with two units of capital produces one additional output. In each graph below, carefully label as much of each graph as you can. a. On a graph with labor on the horizontal axis and capital on the vertical, illustrate isoquants for 100, 200 and 300 units of output. b. Is this production technology homothetic?
c. Suppose the wage and rental rates are 10. On a graph with output on the horizontal axis and dollars on the vertical, plot the total (long run) cost of producing 100, 200 and 300 units of output and illustrate the total cost curve. d. On a separate graph with output on the horizontal and dollars on the vertical axis, illustrate the (long run) marginal cost curve and the approximate shape of the long run average cost curve. What will be an ideal response?
Suppose 100 citizens each derive marginal benefit from submarines according to the function MB = 10 - Q. If subs cost $100 each to produce, what is the efficient quantity of submarines?
What will be an ideal response?
Marginal revenue is: a. the additional cost incurred from producing one more unit of output. b. the addition to total profit from selling one more unit of output
c. the addition to total revenue from selling one more unit of output. d. the addition to total output from hiring one more unit of labor.