An oligopolist charges a lower price than the short-run profit-maximizing price. How does this affect the firm’s productive efficiency?
a. The firm fails at productive efficiency because P 1 exceeds the minimum ATC.
b. The firm fails at productive efficiency because P 1 is less than the minimum ATC.
c. The firm achieves productive efficiency because P 1 exceeds MC.
d. The firm achieves productive efficiency because P 1 is less than MC.
a. The firm fails at productive efficiency because P 1 exceeds the minimum ATC.
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The intertemporal substitution of leisure effect is used to justify the assumption that current labor supply increases when the
A) current real wage increases. B) current real wage decreases. C) real interest rate increases. D) real interest rate decreases.
If the marginal physical product (MPP) of the last dollar spent on labor is only half as large as the MPP from the last dollar spent on capital, this firm should
A) increase its use of labor and employ less capital. B) employ more capital. C) increase its use of both labor and capital. D) maintain its current factor utilization pattern.
Social welfare is
a. a government program through which society takes care of low-income people b. the overall well-being of people in the economy c. measured by spending on party supplies, restaurant meals, and movie tickets d. applies to sociology, not economics e. All the answers are correct.
Which of the following statements about trade is true?
A. Tradeinvolves a winner and a loser. B. Trade often hurts both parties in the long run. C. Trade is a zero sum proposition. D. Trade can benefit both parties.