1-1.5
The optimal level of output occurs when _________ = ___________
Marginal Benefit = Marginal Cost
A binding price ceiling occurs when?
The legal maximum price is lower than the equilibrium price.
In perfectly competitive markets, firms are ___________ selling __________ products
price-takers, homogenous/identical
If it takes Charley 1 hour to make an SI session and Anna 2 hours to make an SI session, who has the comparative advantage in producing SI sessions
Charley
A non-binding price floor occurs when?
The minimum legal price at which a good can be sold is below the equilibrium price
Change in total benefit divided by change in units of a resource employed =
Marginal Benefit
What will happen to the supply and demand of chairs if a decrease in the price of chairs is expected?
The supply will increase and the demand will decrease
Good A costs $4 and merits 30 utils
Good B costs $6 and merits 44 utils
Which good should you buy to maximize utility
Good A
Explicit costs + Implicit costs =
Economic Costs
What will happen to the equilibrium quantity of chips if the price of salsa increases
The equilibrium quantity will be lower
Describe the equal marginal utility principle
The equal marginal utility principle says that consumers should continue to buy units of a resource to the point that the marginal utility per dollar of both resources is equal.
For starting a new business you take out a $10,000 loan, turn down job that offers you $60,000 per year, and pay $30,000 in business expenses
What are your accounting costs?
30,000+10,000
= $40,000
What will happen to the equilibrium price and quantity of peanut butter if the supply and demand both increase?
the price will be indeterminate, and the quantity will increase
When the market price is above the equilibrium price, there is a surplus of the
good, which causes?
the market price to fall
For a year of business: $500/month rent, $10,000 from savings account with 7% interest, $30,000 salary of employees, leaving job that paid you $55,000 per year.
What are your Economic Costs?
700+6,000+10,000+30,000+55,000
= 101,700