Changes

1.Externalities are results of a transaction, but that do not themselves entail or require a transaction for anyone to be affected by them.

1.Externalities are results of a transaction, but that do not themselves entail or require a transaction for anyone to be affected by them.

2.First of all, a situation where total revenue is maximized is pretty much purely theoretical. But, if ''total'' revenue is maximized, that means that what might be called a “revenue ceiling” has been reached, and no more revenue can be made. From this point, it is easy to see that, if revenue is ''already'' maximized at the point of another transaction, the marginal revenue of that transaction must be zero.

2.First of all, a situation where total revenue is maximized is pretty much purely theoretical. But, if ''total'' revenue is maximized, that means that what might be called a “revenue ceiling” has been reached, and no more revenue can be made. From this point, it is easy to see that, if revenue is ''already'' maximized at the point of another transaction, the marginal revenue of that transaction must be zero.

3. Question 24 on unit elasticity. That's a neat concept that I unfortunately forgot the definition of!

3. Question 24 on unit elasticity. That's a neat concept that I unfortunately forgot the definition of!

4.When a local business is patronized and the money stays in the town instead of being sent to a distant corporate headquarters, the community’s wealth increases; this is a positive externality. The converse is a negative externality. The “negative effects” (you’ll know what I’m referring to!) of a sewage plant opening up in the middle of town are also a negative externality.

4.When a local business is patronized and the money stays in the town instead of being sent to a distant corporate headquarters, the community’s wealth increases; this is a positive externality. The converse is a negative externality. The “negative effects” (you’ll know what I’m referring to!) of a sewage plant opening up in the middle of town are also a negative externality.

5.Public goods are difficult to sell at their real prices. A private firm would rather sell a well-defined good or service geared towards individuals rather than collective society.

5.Public goods are difficult to sell at their real prices. A private firm would rather sell a well-defined good or service geared towards individuals rather than collective society.

6.A,B are substitutes. C,D are complements.

6.A,B are substitutes. C,D are complements.

7.The four factors of production are land (probably the location of factories), labor (employees), capital (money, especially money to draw on when starting up shop), and entrepreneurship (advertising, good minds for business, promoting the company, etc.).  

7.The four factors of production are land (probably the location of factories), labor (employees), capital (money, especially money to draw on when starting up shop), and entrepreneurship (advertising, good minds for business, promoting the company, etc.).  

Honors

Honors

9.A public good is better called a resource or a service, something set up for the benefit of the whole society. For example, a church is a public good. A park is a public good. A bulletin board of local events and services is a public good. Government services are also often public goods. You could also define a public good as something which can simultaneously benefit large numbers of the general public, or which are at the immediate disposal of the general public.   

9.A public good is better called a resource or a service, something set up for the benefit of the whole society. For example, a church is a public good. A park is a public good. A bulletin board of local events and services is a public good. Government services are also often public goods. You could also define a public good as something which can simultaneously benefit large numbers of the general public, or which are at the immediate disposal of the general public.   

   

   

10.Number 16, the one with maximized total revenue. I don’t think there is such a thing as a “revenue ceiling,” so it is rare or impossible for a firm to have achieved, at some point in the past, revenue so high it cannot be increased anymore. Other than that, I don’t know exactly ''why'' this is an unlikely situation, but I know that it is.

10.Number 16, the one with maximized total revenue. I don’t think there is such a thing as a “revenue ceiling,” so it is rare or impossible for a firm to have achieved, at some point in the past, revenue so high it cannot be increased anymore. Other than that, I don’t know exactly ''why'' this is an unlikely situation, but I know that it is.

11.The correct answer is shortage of 600. A shortage occurs because a price ceiling increases demand, without adjusting output- in fact, output will probably decrease, because producers are now making less money. Specifically, the shortage can be measured by measuring the quantity between where a line representing the price ceiling intersects the supply curve and demand curve.

11.The correct answer is shortage of 600. A shortage occurs because a price ceiling increases demand, without adjusting output- in fact, output will probably decrease, because producers are now making less money. Specifically, the shortage can be measured by measuring the quantity between where a line representing the price ceiling intersects the supply curve and demand curve.