Economics Homework Five Answers - Student Three

TrishaM

1. Efficiency is the most possible productivity gained from an operation, good, or service with the least amount of time, energy, or money used in transaction costs.

2. A & B must be substitutes while B & C are complements.

3. The marginal cost for me to make one more unit would be $20

4. Steak would be a "normal" good and the hamburger would be an "inferior" good.

5. The basic assumption of the Coase theorem is that the transaction costs equal zero. This assumption is important because if the transaction costs were not zero, then the transaction itself would be not be as efficient as possible.

6. If an owner's marginal revenue exceeds his marginal cost, then he will continue trying to sell as many goods as possible to make more money.

7. The Coase theorem explains that with the use of government regulations, which increase transaction costs, the efficiency of the free market is decreased.