A firm's marginal resource cost curve is
a. horizontal only if the firm is a price taker in the product market
b. horizontal only if the firm is a price taker in the resource market
c. vertical only if the firm is a price taker in the product market
d. vertical only if the firm is a price taker in the resource market
e. horizontal only if the firm is a price taker in both the product and resource markets
QUESTION 2If consuming a good creates a positive externality,
a. marginal private benefits exceed marginal social benefits
b. marginal social benefits exceed marginal private benefits
c. private demand is equal to marginal social benefit
d. private demand is greater than marginal social benefit
e. the private demand curve shifts to the right to coincide with the marginal social benefit curve
QUESTION 3The Pat Summerall School of Diction is employing teachers such that the marginal revenue product of teachers exceeds the wage rate. The school will
a. reduce its demand for teachers
b. lay off teachers
c. be losing money from those teachers employed
d. hire more teachers
e. increase the price of diction classes
QUESTION 4Which of the following is a positive externality of consumption?
a. inoculations against a disease reduce the likelihood of transmitting it to others
b. phosphates from laundry detergents
c. litter from fast-food containers
d. ozone depletion from the production of fast-food containers
e. the greenhouse effect
QUESTION 5If the wage is below the marginal revenue product, then a profit-maximizing firm will
a. employ more workers
b. employ fewer workers
c. see an increase in its demand for labor
d. see an increase in its supply of labor
e. see a fall in its demand for labor
QUESTION 6When consuming a good creates positive externalities,
a. private demand increases
b. private demand decreases
c. the private demand curve overstates the marginal social benefit of the good
d. the private demand curve understates the marginal social benefit of the good
e. the equilibrium quantity increases without government intervention
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