Figure 7.1 shows the U-shaped cost curves for a producer. In the table figure, A is the marginal cost curve, B is the average variable cost curve, and C is the average total cost curve. At an output of 10, the:
a. ?fixed cost equals $10.
b. ?total cost equals $10.
c. ?fixed cost equals $1.
d. ?marginal cost equals $10.
e. ?variable cost equals $10.
Ans: e. ?variable cost equals $10.
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The above figure shows the market for hamburger. Which panel shows the effect of a new excise tax on all beef products?
A) Figure A B) Figure B C) Figure C D) Figure D
The financial situation at Starbucks in the late 2000s illustrates the fact that maintaining long-run profits in a monopolistically competitive market is
A. very difficult. B. impossible. C. almost always guaranteed. D. fairly easy.
If over a period of time real gross domestic product (GDP) increases while nominal GDP decreases, then this implies
a. a significant rise in the price level. b. a significant drop in the price level. c. that real GDP is higher than nominal GDP. d. that the given period occurs before the base period. e. that the given period year occurs after the base period.
Megan took a pay cut from $10 an hour to $7 an hour. As a result of the wage decrease, Megan desires to work less hours and take more hours of leisure. For Megan
A. the substitution effect must be zero. B. the income effect dominates the substitution effect. C. the substitution effect dominates the income effect. D. the substitution effect must equal the income effect.