A firm's average fixed cost is equal to the firm's:
A. fixed cost divided by its level of output.
B. marginal cost divided by its level of output.
C. fixed cost divided by its total revenue.
D. level of output divided by its variable cost.
Answer: A
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The above figure shows the apartment market in Big City. A rent ceiling of $1100 would
A) not create a black market. B) create a shortage of apartments. C) decrease search activity. D) shift the supply curve rightward.
Though large firms have the knowledge and resources to utilize a better pricing strategy, many choose to use cost-plus pricing. One reason for this is that
A) large firms do not have to maximize their profits because they face little competition from other firms. B) firms often adjust the markup they charge to reflect current demand. C) there is less risk of violating antitrust laws if a cost-plus pricing strategy is used rather than a profit-maximizing pricing strategy. D) the additional revenue that would result from a profit-maximizing pricing strategy is an insignificant fraction of the firms' revenues.
International specialization allows a country to use its resources to
a. create jobs for government workers by expanding international foreign aid programs b. produce special goods such as computer software that require specific knowledge c. expand the development of its natural resources such as lumber, oil deposits, and coal d. produce specific goods, allowing other countries to focus on the production of other goods e. develop political ties through international cooperation and mutual sharing of goods
An increase in government spending causes:
a. Aggregate supply to rise, which reduces the nation's average price level and increases real GDP. b. Aggregate demand to rise, which increases the nation's average price level and reduces real GDP. c. Always causes the passive deficit to rise. d. Aggregate supply to rise, which reduces the nation's average price level and reduces real GDP. e. Aggregate demand to rise, which increases the nation's average price level and increases real GDP.