Question

1. In general, the marginal cost (MC) curve is U-shaped as you learned in the lectures and the textbook. However, exception exists. Please provide at least two industries as example to illustrate that MC is not U-shaped. Explain briefly the shape of MC in the two industries.

2.  Assume that engineers at a national research laboratory built a prototype automobile that could be driven 50 miles on a single gallon of water as fuel. They estimate that in mass production the car would cost $100,000 per unit to build. The engineers argue that Congress should force U.S. automakers to build this energy-efficient car. In your opinion, is energy efficiency the same thing as economic efficiency? Please explain your opinion and state whether you support it or not.

Please answer all of the two questions by one paragraph for each.

Answer 1