Average variable costs and average total costs are calculated by dividing by ________
a. revenue
b. profit (P)
c. output (Q)
d. fixed costs (FC)
c
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Four stores have a problem with theft and security is a public good. Let S stand for the number of person-hours of security patrols per week. The marginal benefit of security patrols to each of the stores is given by the formula MB = 200/(1 + S). Patrols cost $25 per hour. If each store provided security independently, how much would each store purchase?
A. 15 person-hours of patrols per week B. 7 person-hours of patrols per week C. 8 person-hours of patrols per week D. 16 person-hours of patrols per week
Which of the following DOES NOT contribute to the market power of a firm?
A) number of available substitutes B) the color of the product C) legal protections D) the number of firms in the market
Suppose the production of helicopters is an industry characterized by increasing returns to scale and an Argentine firm, Cicare, is the only player in this market. The firm caters to the global market and earns a profit of $10 million. Flettner, a German firm has been considering entering this market for a while, but it is aware that its entry will cause each firm to lose about $4 million
However, a government subsidy allows Flettner to enter the helicopter market and Cicare incurs a loss of $4 million due to its entry. Eventually, Flettner evolves as the monopoly supplier of helicopters while Cicare is forced to shut down. This conclusion rests on which of the following assumptions? a. The German government is experiencing a budget surplus. b. There is low demand for Cicare automobiles in the world market. c. The German government is able to forecast accurately the subsidy required to induce helicopter production. d. The quality of Flettner's helicopters are inferior compared to that of Cicare's. e. The Argentine government is not a proponent of "fair trade," hence does not retaliate by subsidizing Cicare.
Suppose all firms in a competitive market are currently in both short-run and long-run equilibrium. What impact will a lump sum tax have on each firm in the short run? in the long run?
What will be an ideal response?