Economics Homework 5 Zachary C. 10-14-09
1. Efficiency is maximizing the potential of time, resources, and opportunities.
2. A and B are compliments. X and Y are supplements.
3. The marginal cost would be $20.
4. A hamburger is an inferior food, because it is less desirable when income increases. Steak is a normal good, because its price increases when income increases.
5. The Coase theorem states that the holder of property rights is unimportant to the outcome of the efficiency of the property, because the property will always utilize the maximum amount of efficiency because of the incentive to do so by the owners or potential owners. The theory may not apply if transaction costs are included.
6. The owner should figure out a way to maximize revenue without it going below the marginal cost.
7. The Coase theorem supports the fact that individual and companies dislike transaction cost because it makes transactions increasingly difficult, complicated, and more expensive. Thus, maximum efficiency is usually not obtained because of the undesirable transaction costs.
Categories: [Economics Homework Five Answers]