Which of the following is the best example of "what goods and services should be produced?"
a. the leasing versus the purchasing of new capital equipment
b. the manufacturing of computer workstations in China or in India
c. the production of SUVs versus the production of sub-compact cars
d. the use of a capital intensive versus a labor intensive process of manufacturing textiles
Answer: c. the production of SUVs versus the production of sub-compact cars
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Pigouvian subsidization:
A. involves the use of taxes or fees to remedy negative externalities. B. involves the use of subsidies to remedy negative externalities. C. is a legal principle requiring a party who takes an action that harms others to compensate the affected parties for some or all of their losses. D. requires that victims of an externality pay a tax to the producers of the externality.
A business incurs the following costs per unit: Labor $5/unit; Materials $3/unit and rent $5000/month. If the firm produces 1000 units a month, the total variable costs equals
a. $5,000 b. $8,000 c. $13,000 d. $10,000
International trade can be correctly considered as an example of a zero-sum game
a. True b. False Indicate whether the statement is true or false
The long-run supply curve for a competitive industry
a. may be horizontal if entry into the industry lowers average total cost. b. may be upward-sloping if higher-cost firms enter the industry. c. will be horizontal if there is free entry into the industry. d. will be upward-sloping if there are barriers to entry into the industry.