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Question
Which of the following is NOT an assumption of the classical model?
A) Wages and prices are flexible.
B) Investment will lead to money illusion.
C) People are motivated by self-interest.
D) Pure competition exists.
Answer
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Suppose that the implicit cost for a business was $1,000 and the explicit cost was $5,000 and that the firm sold 1,000 units of its products at $6 per item. We can conclude that the firmʹsA) accounting profit was $6,000, and its economic profit was $0. B) accounting and economic profits were both $0.C) accounting profit was $1,000, and economic profit cannot be determined. D) accounting profit was $1,000, and economic profit was $0.
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A) it earns positive economic profits.
B) it earns zero economic profits
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In a perfectly competitive market, if P > MC, then
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D) the firm is paying a price for resources that is too high.
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The concept of the production function implies that a firm using resources inefficiently willA) obtain less output than the theoretical production function shows. B) obtain more output than the theoretical production function shows.C) obtain exactly the amount that the theoretical production function shows. D) not be subject to diminishing marginal product.
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Why should a perfect competitor produce at which price equals marginal cost?
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Which of the following is a true statement?A) Any property right system will yield a situation in which all externalities are internalized. B) Voluntary agreements can always yield a situation in which all externalities are internalized.C) Opportunity costs always exist with whoever has property rights.D) Opportunity costs turn external costs into social costs.
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ʺThe market demand curve for labor is the horizontal summation of the labor demand curves of all firms.ʺ Do you agree or disagree? Why?
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A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue isA) $5 per unit, and the monopolist earns zero economic profits.B) $6 per unit, and the monopolist earns economic profits of $2,000 per month. C) $6 per unit, and the monopolist earns economic losses of $1,000 per month. D) $6 per unit, and the monopolist earns economic profits of $3,000 per month.
Q:
Suppose that during a given time period the implicit cost for a business was $1,500 and that the explicit cost was $6,000. Also suppose that the firm sold 1,000 units of its products at $7 per item. We can conclude that the firmʹsA) accounting profit was $1,000, and its economic profit was -$500. B) accounting and economic profits were both $1000.C) accounting profit was -$500, and economic profit was $1,000. D) accounting profit was $1000, and economic profit was -$1,500.
Q:
ʺThe slope of the demand curve gives the elasticity of demand.ʺ Do you agree or disagree?
Why?
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Which of the following type of shops is unlawful under the provisions of the Taft -Hartley Act?A) union shops B) closed shopsC) modified union shops D) open shops