Diminishing marginal returns means that the firm definitely is experiencing
A) diseconomies of scale.
B) constant returns to scale.
C) Both answers A and B are correct.
D) Neither answer A nor B is correct.
Ques. 2The above figure shows Jane's budget line and two of her indifference curves. How many lobster dinners will Jane purchase each month?
A) 4 lobster dinners
B) 5 lobster dinners
C) 8 lobster dinners
D) 10 lobster dinners
Ques. 3The proposition that the price of a resource is expected to rise at a rate equal to the interest rate is called the
A) discounted present value.
B) derived demand for productive resources.
C) diminishing marginal revenue product.
D) Hotelling Principle.
Ques. 4Public universities, by charging tuition ________ the marginal cost of education, ________ the number of students.
A) below; decrease
B) below; increase
C) above; decrease
D) above; increase
Ques. 5The capture theory holds that regulations are supplied to maximize ________.
A) total sales
B) economic profit
C) marginal product
D) consumer surplus
Ques. 6Consider a market for used cars. Suppose there are only two kinds of cars: lemons and good cars. A lemon is worth 1,500 both to its current owner and to anyone who buys it. A good car is worth 6,000 to its current and potential owners.
Buyers can't tell whether a car is a lemon until after they have bought the car. What do economists call the problem that buyers of used cars face? What kind of cars (lemons, good cars, or both) are traded? Explain and substantiate your answer.
Ques. 7Considering the tax and transfer system in the United States, the poor receive
A) less in benefits than they pay in taxes, and so do the rich.
B) more in benefits than they pay in taxes, and so do the rich.
C) less in benefits than they pay in taxes, and the rich receive more in benefits than they pay in taxes.
D) more in benefits than they pay in taxes, and the rich receive less in benefits than they pay in taxes.
Ques. 8The above figure shows Jane's budget line and two of her indifference curves. How many steak dinners will Jane purchase each month?
A) 4 steak dinners
B) 6 steak dinners
C) 8 steak dinners
D) 10 steak dinners
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