When output is 20, fixed costs are $100 and variable costs are $400. When output rises to 21, fixed costs are $100 and variable costs are $450. This implies that the marginal cost of the last unit of output equals:
A. $550.
B. $25.
C. $50.
D. $500.
Answer: C
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Most economists who have studied it believe that the Great Depression was caused by:
A. poor economic policymaking. B. illegal immigration. C. the stock market crash. D. a sharp decline in average labor productivity.
To achieve long-run equilibrium in an economy with a recessionary gap, without the use of stabilization policy, the inflation rate must:
A. not change. B. increase. C. decrease. D. either increase or decrease depending on the relative shifts of AD and AS.
The reason some insurance customers are more eager to purchase insurance is
a. they are more risk averse b. they are less risk averse c. they have a greater risk of making a claim d. A and C
A company finds that at the output level at which marginal cost equals marginal revenue, TC = $500, TVC = $400, and TR = $450. Your advice to the firm is
A) shut down, as TC > TR. B) reduce output to reduce the cost of production. C) increase output to reduce the per unit cost of production. D) continue to produce because loss is less than TFC.