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Terms in this set (10)
The amount that an additional unit of a factor adds to a firm's total revenue is called:
a) additional revenue product.
b) marginal revenue.
c) marginal revenue product.
d) marginal cost.
marginal revenue product.
A firm increases its purchases of a factor of production in a perfectly competitive market from 10 units to 11 units. If the market price of the factor is $10 per unit, the marginal factor cost for the tenth unit is:
Use Table 1: If the product price is $2 per unit, the marginal revenue product for the fifth unit of the variable input is:
Use Table 1: If the product price is $2 per unit and the price of the factor of production is $20 per unit, the profit-maximizing quantity of the factor is _______ units.
Use Table 1: Assume that the product price is $2 per unit, the price of the factor of production is $40 per unit, and 8 units are being hired. Profit can be maximized by hiring _______ unit(s).
a) 1 more
b) 1 fewer
c) 3 fewer
d) 2 more
The price of an extra hour of leisure is:
a) the total utility of labor.
b) the hourly wage rate.
d) the same as the price of money.
the hourly wage rate.
If the benefits of a public good exceed its costs:
a) people really don't value the good.
b) government agencies may either produce the good themselves or pay private firms to produce it.
c) the free-rider notion does not apply.
d) the market can still provide efficiently if the firm is a price setter.
government agencies may either produce the good themselves or pay private firms to produce it.
In the case of an external cost:
a) there is generally an offsetting social benefit.
b) the agent responsible for the external cost will produce too much of the good or service involved.
c) the agent responsible for the cost must pay for the cost.
d) the government will always pay the cost.
the agent responsible for the external cost will produce too much of the good or service involved.
For a public good, nonpayers _______ excluded from obtaining the benefits of the good.
a) cannot be
b) usually are
c) are automatically
d) can be
The tendency of people to avoid paying for a good's benefits when the benefits can be obtained free is the:
a) free-goods problem.
b) free-cost problem.
c) free-market problem.
d) free-rider problem.
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