A firm sells 1000 units per week. It charges $70 per unit, the average variable costs are $25, and the average costs are $65 . In the long run, the firm should
a. Shut down since price is greater than average cost
b. Continue operating price is higher than average cost, its making a profit
c. Continue operating as the firm is covering all the variable costs and some of the fixed costs
d. Shut-down because it is cost effective to pay off the remaining fixed costs
b
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In a market, social surplus is maximized if consumers' willingness to pay for the good equals the ________
A) marginal private cost of producing the good B) marginal external cost of producing the good C) marginal social cost of producing the good D) opportunity cost of producing the good
______________ can model a change in conditions which affects many, if not all, markets in the economy
Fill in the blank(s) with the appropriate word(s).
Which of the following undermines the effectiveness of a barrier to entry?
a. the existence of patents in the industry b. high fixed cost c. no access to resources d. product differentiation e. rapid technological innovation
Fiscal policy involves the actions of
A. business regulation to increase economic efficiency. B. changing the exchange rate to discourage imports. C. taxation and spending in an effort to address inflation and unemployment. D. changing interest rates to stimulate private savings.