A firm is currently producing 1140 units of output according to the production function q = L4/3K1/2 and faces input prices equal to w = $20 and r = $80. In the short run, capital is fixed at 5 units. In the long run, the firm's costs are
A) lower because the firm substitutes towards more labor and away from capital.
B) lower because the firm substitutes towards more capital and away from labor.
C) higher because the firm substitutes towards more labor and away from capital.
D) higher because the firm substitutes towards more capital and away from labor.
B
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Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. At an output of 10,000 units
A) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently high. B) the marginal benefit of iced tea is greater than the marginal cost; therefore, output is inefficiently low. C) the marginal cost of iced tea is greater than the marginal benefit; therefore, output is inefficiently low. D) producers should lower the price to $1 in order to sell the quantity demanded of 10,000.
If average Americans start to pay off the huge credit card debt they now hold, then
A) a shift in the supply of loanable funds will cause interest rates to rise. B) a shift in the supply of loanable funds will cause interest rates to fall. C) a shift in the demand for loanable funds will cause interest rates to rise. D) a shift in the demand for loanable funds will cause interest rates to fall. E) there will be an excess demand for loanable funds.
In Figure 35.1, what is the opportunity cost of DVD players in Japan?
A. 1 motorcycle per DVD player. B. 2 motorcycles per DVD player. C. 1/3 of a motorcycle per DVD player. D. 1/2 of a motorcycle per DVD player.
An example of a good that is nonexcludable is:
A. cable TV. B. a computer. C. a published scientific discovery. D. a concert.