Assume that society places a higher value on the last unit of X produced than the value of the resources used to produce that unit. With no spillovers, this information means that:
A. total cost is greater than total revenue.
B. price is greater than marginal cost.
C. marginal cost is greater than price.
D. resources are being overallocated to X.
Answer: B
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In the above figure, if a subsidy is granted to producers that generates an efficient level of production, then the deadweight loss will be
A) zero. B) $500 C) $1,000. D) $2,000.
A young chef is considering opening his own sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building he owns and currently rents for $6,000 a year. His expenses at the sushi bar would be $50,000 for food and $2,000 for gas and electricity. What is the minimum revenue he must earn per year in order for it to be worth his while to open
his sushi bar? a. $26,000 b. $66,000 c. $78,000 d. $52,000 e. $72,000