The above figure shows the demand and supply curves in the market for milk. Currently the market is in equilibrium
If the government establishes a $2 per gallon price ceiling to ensure that children are nourished, estimate the change in p, Q, and social welfare.
At a price of $2, only 500 gallons are produced. The deadweight loss equals
[(1000 - 500 ) ? (4 - 2 )]/2 = $500.
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The aggregate production function is graphed as
A) a downward sloping curve. B) an upward sloping straight line. C) an upward sloping line that becomes flatter as the quantity of labor increases. D) an upward sloping line that becomes steeper as the quantity of labor increases.
Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $12; AVC = $10; MC = $15; MR = $13. The firm should
A) decrease output. B) increase output. C) increase price. D) change nothing.