21. The land you own has the only known source of aloe needed to make anti-itch

Question

21. The land you own has the only known source of aloe needed to make anti-itch lotion. In this case, your monopoly results from: A) government restrictions. B) location. C) sunk costs. D) ownership of scarce inputs. Use the following to answer question 22: Table: Workers and Output No. of Workers Output 10 25 35 43 48 22. (Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. The total cost of producing 25 statues is: A) $10. B) $20. C) $25. D) $30. 23. In the short run, fixed costs: A) are an important feature in a firm's decision to produce or not produce. B) have no impact on a firm's profit level. C) do not exist. D) remain constant 24. In an industry characterized by extensive economies of scale: A) small companies are more profitable than large companies. B) large companies are more profitable than small companies. C) small and large companies are equally profitable. D) small companies will drive out large companies.

Explanation / Answer

21> D

Reason

As I own the scarce land for that particular cultivation, I can be a monopoly.

22> B

Here the total cost is the cost of labor which is 2x$10 = $20 per day.

23> D

Fixed cost does not depend on the number of outputs made.

24> B

Large companies are profitable as it can produce more efficiently.

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