Refer to Figure 4-1. Arnold's marginal benefit from consuming the second burrito is
A) $1.00. B) $1.50. C) $2.00. D) $4.50.
C
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The marginal cost curve intersects the average variable cost curve (AVC)
a. only when the AVC is rising b. at the AVC curve's maximum point c. at the AVC curve's minimum point d. only when the AVC is sloping downward e. when the AVC intersects the fixed cost curve
The "Public Choice" school of economists argue that:
a. the invisible hand of the market is inefficient in allocating resources to their best uses. b. the government often does not take correct economic decisions as it is run by self-interested politicians. c. the government takes correct decisions as it is run by conscious and educated individuals. d. the market fails to maximize social efficiency. e. the government is a non-profit making organization which works to maximize social efficiency.
In long-run equilibrium, the perfectly competitive firm produces
a. where P = MC = AC. b. at the lowest point on its long-run average cost curve. c. where its long-run average cost curve is tangent to its horizontal demand curve. d. All of the above are correct.
The motivating force behind an increase in supply in a long-run adjustment to equilibrium is
a. lower prices. b. economic profits that are present in the short run. c. higher profit expectations among owners of firms in the industry, triggered by increased prices. d. normal profits witnessed by individuals outside the industry that trigger entry. e. the decreases in average cost that can be obtained through economies of scale.