The market price for wallets is $20. Your technology is such that at your most efficient production point, the average total cost of producing a wallet is $2.50. Your manager runs into your office and shouts, "Boss!!! Average costs are rising!! Average costs are rising!!" To make a profit-maximizing decision, you should:
A. ask the manager about the average total cost.
B. immediately stop production.
C. completely ignore your manager.
D. ask the manager about the marginal cost.
Answer: D
You might also like to view...
When there is an expansionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; expand B. increase; raise; decline C. decline; lower; decline D. decline; raise; decline
In a situation of free trade,
A. countries with comparative advantage will export more than countries with comparative disadvantage import. B. the total quantity of an item exported will be greater than the total quantity imported. C. importing countries will always produce some good, so that total quantity imported is less than total quantity exported. D. the total quantity of an item exported will equal the total quantity imported.
Explain why economists care about unemployment
What will be an ideal response?
Mary Jo Smith is willing to work for $3,200 per month. She asks the HR manager at Plain Truth Advertising for $4,000 per month. He was willing to pay only $3,700 per month, so he rejects her application and begins to search for a new employee again. This is an example of
A. agency problem. B. bargaining failure. C. value maximization. D. adverse selection.