Mindtap Economics, 1 Term (6 Months) Printed Access Card For Arnold's Macroeconomics, 13th
13th Edition
ISBN: 9781337621397
Author: Arnold, Roger A.
Publisher: Cengage Learning
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Chapter 20, Problem 1QP
To determine
Explain the significance of judging theories based on prediction rather than the way its sounds.
Expert Solution & Answer
Explanation of Solution
Predictions are a stepping stone of believing or not believing a theory because sometimes people want to believe some theories over others, as the theory seems to confirm what people already believe. In real life, before 1960s, people had no idea about wireless mobile phones until its invention. Therefore, people believed that the landline mobile phones is the final invention. However, a scientist predicts with the evidence of technological changes that people will use wireless mobile phones in the future. Since people accept theory because the evidence of the prediction seems to confirm the beliefs of the individuals. Therefore, prediction has more importance than a theory sounds good to people.
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Students have asked these similar questions
Wolfgang is a typical producer in a perfectly
competitive piano industry (i.e., all other producers of
pianos face the same costs as Wolfgang). The
following production and cost data apply to the long run
as well as the short run. Fixed costs (rent) are
unrecoverable in the short run and are equal to $2400
per month. Variable costs consist of raw
materials (wire, wood, plastic), which cost $1000
per piano, and the $40 per hour opportunity cost
of Wolfgang's time. Wolfgang's production function is
given in the table at right.
Wolfgang will shut down if the price per piano is less
than
OA. $3000.
B. $4000.
O C. $5000.
○ D. None of the above.
Pianos (Q)
Hours (L)
Raw Materials (
0
0
0
1
100
1000
2
150
2000
3
240
3000
4
400
4000
P2
P₁
$ per unit
Using the graph below, determine which statement is TRUE.
MC1
SRATC₁
Q1
Q₂
MC2 SRATC2
LRAC
✓ LEA
Quantity
Using the grapns below, wnicn snow the snort-run cost curves for 3 perfectly competitive firms in the same industry, determine whether the industry is in long-run equilibrium or not.
Q
Q
Firm A
QA
MC
ATC
Output
Firm B
QB
MC
ATC
Firm C
MC
ATC
Output
Output
Qc
If Firms A, B and C are in the same industry, is this industry in long-run equilibrium?
○ A. Yes, because P = MC = MR for each of the 3 firms.
○ B. No, because Firm A is not producing at a profit-maximizing level of output.
○ C. Yes, because all 3 firms are producing at their minimum average total cost.
OD. The answer is uncertain since it's unknown whether the firms are producing at the minimum efficient scale or not.
○ E. No, because if the industry were in equilibrium, all 3 firms would be earning zero economic profits.
Chapter 20 Solutions
Mindtap Economics, 1 Term (6 Months) Printed Access Card For Arnold's Macroeconomics, 13th
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