The average variable cost, the average total cost, and the marginal cost start to diminish only after the firm reaches the point of efficient scale
a. True
b. False
Indicate whether the statement is true or false
False
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According to supply-side economists, lower marginal tax rates will not necessarily lead to lower tax revenues because
A) the crowding out effect does not apply to taxes. B) lower tax rates have no effect on the opportunity cost of labor. C) the aggregate supply curve will shift inward to the left if the tax rates are lowered. D) the lower marginal tax rates will be applied to a growing tax base due to economic growth.
In the context of the production possibilities curve, opportunity cost is measured in:
a. dollars paid for the goods. b. the quantity of other goods given up. c. the value of the resources used. d. changing technology. e. units of satisfaction.
Why are long-run costs always less than or equal to short-run costs?
a. In the long run, technological change can occur, leading to lower costs over time. This means that long-run costs will always be less than or equal to short-run costs at the same level of output. b. In the long run, employees are more productive so the firm's costs will be lower. This means that long-run costs will always be less than or equal to short-run costs at the same level of output. c. In the long run, all inputs are flexible so the firm can minimize all costs. This means that long-run costs will always be less than or equal to short-run costs at the same level of output. d. In the long run, firms can choose how much output to produce based on demand, which will lead to lower costs. This means that long-run costs will always be less than or equal to short-run costs at the same level of output.
If the price a firm charges in a perfectly competitive industry is greater than average total cost:
A. the firm is earning an economic profit equal to zero. B. the firm is earning an economic profit greater than zero. C. the firm is earning an economic profit less than zero. D. it is not possible to determine anything about profits.