Refer to the above figure. Economic profits for this firm are
A. negative and equal to P1bcP2.
B. positive and equal to P1abP2.
C. negative and equal to P2bcP3.
D. positive and equal to P2bcP3.
Answer: B
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Many economists argue that the labor market may take a long time for wages to adjust to new equilibrium level
Indicate whether the statement is true or false
When a country imposes an import quota, its
a. net exports rise and its real exchange rate appreciates. b. net exports rise and its real exchange rate depreciates. c. net exports fall and its real exchange rate depreciates d. None of the above is correct.
Refer to Negative Externality. Suppose there are no transactions costs. Also suppose the externality is internalized when the damaged parties offer producers a bribe of $5 per unit to reduce their production. Coase's analysis indicates that social gain in this situation will equal
The following questions refer to the accompanying diagram, which shows the effects of a negative externality created by an industry's production. The equilibrium quantity in the absence of any attempt to internalize the externality is QE, and the optimal quantity according to a Pigovian analysis is QO.
a. area A + B + F.
b. area A + B + F - E.
c. area A + B + C + D + F + G + H.
d. area A + B + C + F + G.
Refer to Table 18.1. The opportunity cost of a glove in Russia is
A) 1/8 of a hat. B) 1/3 of a hat. C) 3 hats. D) 8 hats.