Suppose there is only one producer of frames, a necessary component in manufacturing computer monitors. Because of the threat of entry, this firm charges its customers a price equal to average cost. One reason that a producer of computer monitors may make rather than buy frames is
a. the frame supplier may be unreliable
b. the total cost of the components of frames is the same as the price of frames purchased in the market
c. the frame manufacturer has no incentive to make high-quality frames
d. managers at the computer monitor firm place a high value on their time
e. the frame manufacturer will soon go out of business because firms do not produce goods for the market that can be made in-house
A
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A. D; an expansionary B. B; no output C. B; expansionary D. A; a recessionary
The law of diminishing marginal utility explains why
A. economists think that utility is a fallacy. B. consumers optimize by spending all of their income. C. individual demand curves have a negative slope. D. marginal utility rises as total utility falls.
Which of the following will result in a decrease in the price of an existing corporate bond?
A) lower expectations of inflation B) new bonds issued at a lower interest rate C) increased default risk D) all of the above
Answer the next question based on the following data.OutputTotal Cost0$24133241348454561669What is the average variable cost of the 4th unit of production?
A. $13.50 B. $24.00 C. $6.00 D. $7.50