Scott is a woodworker and charges $125 an hour for his time manufacturing custom-made wood products. For his wife's birthday, he designs and creates an intricate birdseye maple jewelry box that takes him 15 hours to complete
By how much and in what direction does GDP change as a result of his efforts?
A) GDP rises by $125.
B) GDP is not affected by Scott's production of the jewelry box.
C) GDP rises by $1,875.
D) GDP falls by $1,875.
B
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Perfectly competitive firms are said to be "small." Which of the following best describes this smallness?
A) The individual firm must have fewer than 10 employees. B) The individual firm faces a downward-sloping demand curve. C) The individual firm has assets of less than $2 million. D) The individual firm is unable to affect market price through its output decisions.
Suppose that in the market for paper, demand is p = 100 - Q. The private marginal cost is MCp = 10 + Q. Pollution generated during the production process creates external marginal harm equal to MCe = Q. What is the total external harm at the competitive market level of output?
A) 1350.5 B) 2025 C) 672.5 D) 1012.5