Suppose that you have returned from your fishing expedition with 20,000 fish. The market price is $3 per fish. Your average fixed cost was $1 and your total variable cost was $5,000 . If the price jumps to $3.50 before you sell your first fish, how much extra profit, if any, do you earn?
a. c and d.
b. Extra profit is zero.
c. Extra profit is enough to cover half of the fixed cost of your next trip.
d. Extra profit is enough to cover all of the variable costs of your next two trips.
e. Extra profit is $45,000.
d
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If the elasticities of demand for alcohol, tobacco and gasoline are low and the elasticities of supply are high, then the burden of these taxes (excise taxes) falls more heavily on buyers than on sellers
Indicate whether the statement is true or false
Regarding the production of health care, more recent studies suggest that:
A) economies of scale exist up to a hospital size of approximately 500 beds. B) hospitals of many different sizes can compete effectively with each other on the basis of cost. C) the LRAC curve exhibits significant diseconomies of scale beginning with a hospital size of approximately 100 beds. D) the LRAC for hospitals exhibits a very distinct U shape.