The study of microeconomic theory focuses on
A. individual behavior in the economy
B. Operation of the entire economy.
C. Interaction of international trade and domestic production of goods and services.
D. Role of the banking system in the economy.
Answer: A
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Answer the following questions true (T) or false (F)
1. RJR Nabisco has three alternatives for manufacturing snack foods: • Option 1: Manufacture cookies alone and obtain a profit of $30 million. • Option 2: Manufacture chips alone and obtain a profit of $25 million. • Option 3: Manufacture both cookies and chips and obtain a profit of $35 million. Given the information above, the opportunity cost of this firm is $30 million. 2. The number of U.S. farms is on the order of 4 million at present. 3. The value of any index for the reference or base year is always 1.
One major problem with concentration ratios is that they fail to take into account:
A. The localized market for products B. Excess capacity in production C. Price leadership D. Mutual interdependence