question
the profit maximizing assumption may not hold for any
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- organizations granted non-profit tax status
- large firms where there is a separation of ownership and control
- small firms where the owner strives to run the business based on principles of utility maximization
- large firms where there is a separation of ownership and control
- small firms where the owner strives to run the business based on principles of utility maximization
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efficiency wage
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a wage that yields equilibrium unemployment in the labor market
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when production exhibits technical efficiency ths refers to
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getting the greatest output for given inputs
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Example of short run adjustments
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Local wal-mart hires 2 more associates
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when the law of diminishing marginal productivity is operating
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marginal productivity is falling and marginal costs are rising
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if a firm is utilizing capital and labor in quantities such that MPL/PL < MPK/PK, in order to minimize the costs of production it should
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buy more capital and less labor
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if firms are minimizing their costs of production
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- MPL/PL = MPK/PK
- if the PL rises, firms will utilize less labor and more capital
- if PK rises, the MPK following adjustment to the new input combination will be higher
- if the PL rises, firms will utilize less labor and more capital
- if PK rises, the MPK following adjustment to the new input combination will be higher
question
a rise in input prices will shift the marginal and average cost curves
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upward
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the optimal size of the firm in the long run occurs
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at the output level where long run average costs are minimized
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Why is the long run average total cost curve U-shaped
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economies and diseconomies of scale in production
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When closed economies open up to trade with other countries they might find that the average costs of production fall because
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they can now take full advantage of economies of scale in production
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optimal size of the firm
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may change over time with changes in technology
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implicit costs are
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unaccounted for opportunity costs of inputs in production
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characteristics of a perfectly competitive market structure
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- all firms sell identical products
- there are no restrictions to entry by new firms
- there are a very large number of firms that are small compared to the market
- there are no restrictions to entry by new firms
- there are a very large number of firms that are small compared to the market
question
if a typical firm in a perfectly competitive industry is earning positive economic profits, then
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new firms will enter in the long run causing market supply to increase, market price to fall and profits to decrease
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Country that is least reliant on markets to allocate resources
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Cuba
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in deciding whether to go to lecture in the final week of classes you should
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not include tuition as part of your decision
question
a glassware producer is currently producing 10 units of glassware. he is deciding whether to produce one more unit. he knows MB of producing one additional unit of glassware is $100 and MC is $120. according to economic decision rule, the producer should
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refrain from producing the 11th unit
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if marginal benefit of spending your last dollar on a bag of pretzels is MUP/PP the marginal cost is
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MU/P of acquiring the next best alternative (e.g jelly beans)
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empirical evidence on the demand for low skill labor suggests that the elasticity of demand is _____ and so an increase in the minimum wage is likely to lead to ____ in the total compensation of low-skill labor
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....less than 1....an increase
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to derive a market demand curve from two individual demand curves
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one adds the two demand curves horizontally
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an increase in demand for a good will cause
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excess demand (a shortage) until prices change
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assume that the cost of shipping automobiles from the united states to japan decreases. what will most likely happen to the selling price and quantity of cars made in US and sold in Japan
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the price will fall and quantity will rise
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A higher equilibrium price with no change in market equilibrium quantity could be caused by
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a decrease in supply and an increase in demand
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an increase in minimum wage can be expected to
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cause unemployment for some workers
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As the manager of a hotel, you want to increase the number occupancies by 12%. it has been determined that the price elasticity of demand for rooms is 2. this implies:
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if you lower your rates by 6% then you will increase the number of occupancies by 12%
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The demand for toilet paper in tuskaloosa is very inelastic. one explanation for this might be
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although substitues do exist (kleenex, napkins, etc.) none of them are very close substitutes because this good is very broadly defined
question
Dennis is deciding where to spend his spring break. if he goes to vali, colorado, the trip will give him 10,000 units of utility (satisfaction) and will cost him $500. if instead he travels to padre island, texas the trip will give him 6000 untits of pleasure and cost him 400. dennis should go to.
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vali because his pleasure per dollar spent will be greater
question
which of the following is not consistent with rational decision making
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being enrolled in your company's pension plan because you were automatically enrolled when you joined the company
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a positional good is:
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one for which the utility associated with it depends on how much you have relative to others
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