A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation of this finding?
A. the principle of opportunity cost
B. the principle of diminishing returns
C. the marginal principle
D. the spillover principle
Answer: B
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In order for a taxicab to be operated in New York City, it must have a medallion on its hood. Medallions are expensive, but can be resold, and are therefore an example of
A) a fixed cost. B) a variable cost. C) an implicit cost. D) an opportunity cost. E) a sunk cost.
Which one of the following is part of the M2 definition of the money supply, but not part of M1?
a. Checkable deposits. b. Currency held in banks. c. Currency in circulation. d. Small time deposits of less than $100,000.
Which of the following statements is true?
A) In a price support program, consumers end up paying the price support. B) In a target price system, consumers end up paying the target price. C) In a target price system, the per-unit deficiency payment is equal to the difference between the quantity demanded at the market price and the quantity supplied at the market price. D) Acreage allotment programs directly (as opposed to indirectly) raise agricultural product prices. E) b and d
With a natural monopoly, the potentially insurmountable barrier to entry is the
A. low profit margins. B. decreasing average total costs. C. increasing average costs. D. the absence of fixed costs.