As suppliers and potential suppliers of exhaustible resources continually calculate whether to extract now or in future, and how much to extract, an equilibrium arises when:
a. the cost of extracting such resources is equal to its price.
b. the rate of return for such resources equals the rate of interest on alternative uses of the funds.
c. the cost of extracting such resources is equal to the price of the commodity using these resources.
d. the price of such resources is equal to the rate of interest of bank accounts and other interest-bearing investments.
e. the rate of return on alternative investments is equal to the cost of extracting such resources.
QUESTION 2The laws of contracts and their enforceability in court determine the range of transactions that we will find it worthwhile to undertake.
Indicate whether the statement is true or false
QUESTION 3When the average total cost is at its minimum, it is:
a. equal to average variable cost.
b. greater than marginal cost.
c. equal to average fixed cost.
d. equal to marginal cost.
e. less than marginal cost.
QUESTION 4In order to maximize profits, a firm should produce the level of output at which total revenue is maximized.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5In the market for crude oil, everything held constant, if rate of interest of simple bank accounts or interest-bearing investments decline, then:
a. the consumption of crude oil declines in the present period.
b. the extraction of crude oil will increase today.
c. the price of the crude oil in the international market falls in the present period.
d. greater research and developments are conducted to locate new sites of crude oil in the present period.
e. the extraction of crude oil will fall in the present period.
QUESTION 6With technological developments, more resources are discovered which change production sets for countries and make world trade more and more beneficial.
Indicate whether the statement is true or false
QUESTION 7At its minimum point, the average-total-cost curve is intersected by the:
a. average fixed cost curve.
b. average variable cost curve.
c. total fixed cost curve.
d. total variable cost curve.
e. marginal cost curve.
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