Suppose that an economy produces 30,000 units of good A which sells at $3 a unit and 60,000 units of good B which sells at $2 per unit. Production of good A contributes
a. 1/2 times as much to GDP as the production of good B.
b. 3/2 times as much to GDP as the production of good B.
c. 3/4 times as much to GDP as the production of good B.
d. 4/3 times as much to GDP as production of good B.
c
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A firm's production process shows constant returns to scale. It can produce 5,000 widgets at a total cost of $2,500 and 10,000 widgets at an average cost of
a. $10,000. b. $5,000. c. $2,000. d. $0.50.
A nonexcludable public good is
A) rivalrous in consumption and nonexcludable B) nonrivalrous in consumption and excludable C) nonrivalrous in consumption and nonexcludable D) rivalrous in consumption and excludable E) none of the above
Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be: Demand: Qd = 10,000 ? 10,000P + 1.0MSupply: Qs = 80,000 + 10,000P ? 4,000PIwhere Q is quantity, P is the price of the product, M is income, and PI is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and PI for 2015:
= $50,000 and 
I = $20The manager also estimates the average variable cost function to beAVC = 3.0 ?
0.0027Q + 0.0000009Q2Total fixed costs will be $2,000 in 2015. The optimal level of production for the firm is A. 1,000 B. 2,000 C. 1,500 D. 2,500 E. none of the above
If resources are allocated efficiently in a market economy:
A. each person's utility is maximized, and so the result is Pareto optimal. B. the outcome will always be socially desirable. C. the way final goods and services are distributed does not matter to society. D. the outcome may not be socially desirable if distributional issues are also important.