Refer to Table 8.2. Assume that Sherry's Earrings is producing in a perfectly competitive market and the market price for earrings is $60. To maximize profits Sherry should produce __________ pairs of earrings.
A) two
B) three
C) four
D) five
C) four
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According to real business cycle theory, an increase in financial frictions might lead to ________, if ________
A) a decrease in output; the rise in the credit spread causes a leftward shift of aggregate demand B) a decrease in inflation; the disruption of capital markets results in a leftward shift of long-run aggregate supply C) a decrease in output; the disruption of capital markets results in a leftward shift of long-run aggregate supply D) a decrease in output; a decline in expected output causes a leftward shift of aggregate demand
A firm realizes that the market price has fallen below its average total costs, and it is now earning a loss. What is the best action for the firm to take in the short run?
A. Produce where MC = MR to minimize losses if P > AVC. B. Shut down if price is greater than average variable costs. C. Produce where MC = MR to minimize losses if P < AVC. D. Shut down if total revenue is less than fixed costs.
Refer to Table 2-4. What is the opportunity cost to Picnicland of increasing the production of hotdogs from 450 to 900?
a. 150 burgers b. 225 burgers c. 300 burgers d. 450 burgers
Refer to the information. The marginal cost of the third unit of output is:
The Sunshine Corporation finds that its costs are $40 when it produces no output. Its total variable costs (TVC) change with output as shown in the accompanying table. Use this information to answer the following question.
A. $105.
B. $25.
C. $15.
D. $20.