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Will firms in a price-taker market be able to earn profits in the long run? Why or why not? What determines profitability? Discuss.
Why does the short-run market supply curve for a product slope upward to the right? Why does the long-run market supply curve generally slope upward to the right?
When the firms in the industry are just able to cover their cost of production, economic profit is zero. Therefore, if demand falls, causing prices to go down even a little bit, all of the firms in th
In a price-taker market, if a business operator produces efficiently-that is, if the cost of producing the good is minimized-the operator will be able to make at least a normal profit
Farmers are often heard to complain about the high costs of machinery, labor, and fertilizer, suggesting that these costs drive down their profits
What are implicit costs? Do implicit costs contribute to the opportunity cost of production? Should an implicit cost be counted as cost? Give three examples of implicit costs.
If a firm maximizes profit. It must minimize the cost of producing the profit-maximizing output.
What is the principal-agent problem? When will the principal-agent problem be most severe? Why might there be a principal-agent problem between the stockholder-owners and the managers of a large corpo
What is economic profit? How might it differ from accounting profit? Explain why firms that are making zero economic profit are likely to continue in business.
Sue loves ice cream but cannot stand frozen-yogurt desserts. In contrast, Carole likes both foods and can hardly tell the difference between the two. Who will have the more elastic demand for yogurt?
A consumer is currently purchasing three pairs of jeans and five T-shirts per year. The price of jeans is $30, and T-shirts cost $10. At the current rate of consumption, the marginal utility of jeans
A bus ticket between two cities costs $50 and the trip will take twenty-eight hours, whereas an airplane ticket costs $300 and takes three hours. Mary values her time at $12 per hour
What conditions must be met for buyers to bear the full burden of a tax? What conditions would cause sellers to bear the full burden? Explain.
To be meaningful, a price ceiling must be below the market price. Conversely, a meaningful price floor - must be above the market price. What impact will a meaningful price ceiling have on the quantit
What is the difference between a price ceiling and a price floor? What will happen if a price ceiling is imposed below the market equilibrium? If a price ceiling for a good is set below the market equ
Suppose that college students in your town persuaded the town council to enact a law setting the maximum price for rental housing at $200 per month.
How will a substantial increase in demand for housing affect the wages and employment of carpenters, plumbers, and electricians?
Do business firms operating in competitive markets have a strong incentive to serve the interest of consumers? Are “good intentions” necessary if individuals are going to engage in actions
How is the market price of a good determined? When the market for a product is in equilibrium, how will consumers value an additional unit compared to the opportunity cost of producing that unit? Why
The price of X and Y are $40 and $60 respectively. Use the following table of total utilities to answer the following questions.Good Total Utility of X Total Utility of Y
Vinnie’s Place has enjoyed its monopoly position selling fast food in Far West, VA. The manager, Vinnie Manicotti, has heard that his success has attracted the attention of other companies.
What"s wrong with this way of thinking? “Economists argue that lower prices will result in fewer units being supplied. However, there are exceptions to this rule. For example, in 1972
What is the difference between substitutes and complements? Indicate two goods that are substitutes for each other. Indicate two goods that are complements.
Using the following information, calculate total utility and marginal utility.a. Plot the total utility curve.b. Plot marginal utility directly below total utility.c. At what marginal utility value do
How would you characterize your demand for health insurance — elastic or inelastic? Does the price elasticity of health insurance vary with age, ethnicity, gender, etc.? Does it vary depending o