If a firm is a profit maximizer and faces positive marginal costs,
A) there is a natural limit to the size of the firm, where MR = 0.
B) there is no natural limit to the size of the firm; it can be as large as it wants to be.
C) there is a natural limit to the size of the firm, where MR > 0.
D) there is no natural limit to the size of the firm, hence the need for government regulation.
C
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The economic value which can be created by a transaction between two people, Ed (seller) and Luis (buyer), is $50 as Ed's opportunity cost of selling is $135 and Luis' valuation of the good is $185 . If each gains $25 from this transaction, which of the following conclusions can be drawn?
a. Transaction costs are zero. b. Luis has higher bargaining power than Ed. c. Ed has higher bargaining power than Luis. d. Transaction costs are positive.
Which furniture production process would have the highest wage rates?
A. Furniture made by handsaw and hammer B. Furniture made with power equipment C. Furniture with a mix of handmade and automated labor D. Furniture made in an automated furniture factory
The effects of tax cuts or government spending dissipate and each additional change in consumption and income becomes smaller and smaller because
A) some of the increase in income will be lost through taxation. B) some of the increase is saved and does not result in an increase in consumer demand. C) some of the increase in consumption will be an additional demand for imported goods. D) All of the above. E) None of the above.
The following is NOT an example of a potential monitoring solution to moral hazard
a. blocking social network sites on company computers b. closed circuit TVs throughout a warehouse c. GPS tracking devices in repair trucks d. requiring physicians to be 'board certified'