Question

Please answer and explain the steps involved in each.

20. The rate of product transformation refers to a. how a consumer can trade one good for another while still maximizing his or her utility. b. how a firm can substitute one input for another and still maintain the same production level. c. how production of one good can be substituted for another while still using a fixed supply of inputs efficiently. d. how quickly a firm can produce a final good while starting with only natural resources. 21. Suppose two goods (X and Y ) are being produced efficiently and that the production of X is always more labor intensive than the production of Y. Production depends only on two factors (capital and labor); these may be smoothly substituted for each other. The total quantities of these inputs are fixed. An increase in the production of X and a decrease in the production of Y will a. increase the capital-labor ratio in each firm. b. decrease the capital-labor ratio in each firm. c. leave the capital-labor ratio for each firm unchanged. d. increase the capital-labor ratio in Y production and decrease the capital-labor ratio in X production. 22. A monopolist with constant average and marginal cost equal to 8 (AC = MC = 8) faces demand 100 - P, implying that its marginal revenue is MR = 100 - 20. Its profit maximizing quantity is a. 8 b. 46 c. 50 d. 92 23. Consider the same monopoly situation as in the previous question. The monopoly price is a 8 b. 46 c. 54 d. 92 24. Consider the same monopoly situation as in the previous question. The deadweight loss associated with this monopoly is a. 966 b. 1,058 c. 2,484 d. 3,680 25. Which is not an example of price discriminating by separating markets? a. offering discounts for students with IDs. b. charging lower prices for airline tickets with a Saturday stay-over. c. selling 13 bagels (a "baker's dozen") for the price of 12. d. selling snowblowers at a discount in relatively warmer climates. 26. The principal difference between economic profits for a monopolist and for a competitive firm is that a. monopoly profits create major problems of equity whereas competitive profits do not b. competitive profits exist only in the short run whereas monopoly profits may exist in the long run as well.

Answer 1

Correct Answer : C

The rate of product transformation refers to the trade-off between the production of two goods taking the inputs ceteris paribus i.e. technology and inputs of production to be constant. This rate is known as the marginal rate of product transformation. So basically it represents the opportunity cost of producing a good.