In the United States, Texas ranks number one in the amount of installed megawatts for wind power generation and Florida ranks number one in the number of beach vacations. These facts point out that
A) Texas has a comparative advantage in wind power generation.
B) Texas definitely has an absolute advantage in wind power generation.
C) Florida should produce more wind energy.
D) Florida can produce wind energy at a lower opportunity cost than can Texas.
Ques. 2In the long-run equilibrium, a firm's price definitely equals its average total cost in
A) both monopoly and monopolistic competition.
B) neither monopoly nor monopolistic competition.
C) monopoly but not monopolistic competition.
D) monopolistic competition but not monopoly.
Ques. 3The minimum wage in 2008 was 6.55 cents until July 2008 when it was raised to 7.25. If the minimum wage in June was below the equilibrium wage and the increased wage in July was above the equilibrium wage, then
A) firms' producer surplus was greater in June than in July.
B) unemployment was unaffected by the increase.
C) the deadweight loss was greater in June than in July.
D) employment of low-skilled workers increased in July.
Ques. 4For the monopoly shown in the figure above, the profit maximizing price is ________ per unit.
A) 10
B) 20
C) 30
D) 50
Ques. 5For many jobs, as wages increase, the quantity supplied of labor increases. This set of facts is evidence that the
A) substitution effect is larger than the income effect and the supply of labor curve is upward sloping.
B) income effect is larger than the substitution effect and the supply of labor curve is upward sloping.
C) substitution effect is larger than the income effect and the supply of labor curve is backward bending.
D) income effect is larger than the substitution effect and the supply of labor curve is backward bending.
Ques. 6A firm's average variable cost is 60, its total fixed cost is 3,000, and its output is 600 units. Its average total cost is
A) less than 58.
B) between 58 and 62.
C) between 62 and 64.
D) more than 64.
Ques. 7What is the relationship between the marginal social benefit of milk and marginal social cost of milk when the efficient quantity of milk is produced?
What will be an ideal response?
Ques. 8Beachcomber Beatrice spent her entire wealth of 100,000 to build a beach house on the Gulf of Mexico. There is a 10 percent chance that the house will be totally destroyed by a hurricane.
Beatrice's utility of wealth schedule is given in the table above. What is the minimum amount that the insurance company would require Beatrice to pay for an insurance policy that pays 100,000 if her beach house is destroyed by a hurricane? (Assume the insurance company has no other costs.) A) 10,000
B) 30,000
C) 40,000
D) 60,000
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