For a perfectly competitive firm, marginal revenue product is equal to:
a. price minus marginal cost.
b. price times marginal revenue.
c. price times marginal product.
d. none of these.
QUESTION 2A large aircraft manufacturer, like Boeing, may have a cost advantage over a new smaller manufacturer because of:
a. diseconomies of scale.
b. economies of scale.
c. diminishing returns to a fixed factor of production.
d. the principal agent problem is generally less severe for larger firms.
QUESTION 3The recession that set in after December 2007 can be attributed to:
a. an increase in expenditure on war.
b. a decline in home prices and an increase in foreclosures.
c. an increase in terrorist activities.
d. crop failures around the world.
e. an increase in oil prices in the international market.
QUESTION 4The increase in a firm's total revenues resulting from hiring an additional unit of labor is known as the marginal:
a. product.
b. revenue product.
c. cost.
d. none of these.
QUESTION 5In the long run, firms in many industries often experience a falling average total cost curve as a result of:
a. gains through trade.
b. increasing marginal returns.
c. economies of scale.
d. lower fixed costs.
QUESTION 6Which of these factors can explain the short recession experienced by the U.S. in 2001?
a. Terrorist attacks
b. The stock market crash
c. Bursting of the real estate bubble
d. A rise in international oil prices
e. Expenditure on war
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