A firm in pure competition would shut down when:
a. price is less than average total cost
b. price is less than average fixed cost
c. price is less than marginal cost
d. price is less than average variable cost
d
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Why does excessive fishing occur?
a) Fishermen are concerned about the population dynamics of fish biomass, not current harvest rates. b) Fishermen have other marketable skills and do not fear exploitation of fish reserves. c) Each individual fisherman has little incentive to maintain the species for the next year. d) Fishermen rely on government managers to worry about fish populations.
In an exchange economy A's utility is given by UA = x + y and B's by UB = min[x, 2y]. The initial endowment for A is x = 10, y = 8 and for B, x = 8, y = 4 . To reach the contact curve, these individuals must:
a. trade 1x for 1y. b. trade 2x for 1y. c. trade 1x for 2y. d. do nothing, since they are already on the contract curve.