The efficient scale of a firm is defined as the point where
A) average total cost is minimized.
B) marginal revenue equals marginal cost.
C) price equals marginal cost.
D) marginal revenue equals zero.
Ques. 2If an indifference curve is a straight line it will not show which of the following?
A) any marginal rate of substitution
B) diminishing marginal rate of substitution
C) combinations of goods among which a consumer is indifferent
D) None of the above answers is correct.
Ques. 3The tables above show the marginal costs and benefits from production of paper. If the market is perfectly competitive and unregulated, at the equilibrium level of output, the marginal external cost is
A) zero
B) 10
C) 20
D) 30
Ques. 4Which of the following will increase the wage rate?
A) an increase in the adult population
B) an increase in the retirement age
C) an improvement in technology that increases the marginal product of labor
D) Both answers A and B are correct.
Ques. 5Van, whose utility of wealth curve is shown in the above figure, owns a home that is valued at 100,000. There is a 10 percent chance that the house will be destroyed by hurricane. The value of insurance to Van is
A) 10,000.
B) 15,000.
C) 20,000.
D) 30,000.
Ques. 6A merger will be challenged by the FTC in a market where the Herfindahl-Hirschman Index (HHI) is ________, and the merger would increase it to ________.
A) 2,900; 3,100.
B) 1,700; 1,760
C) 800; 950
D) 2,000; 2,040
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