A perfectly competitive firm's ________ point is the lowest point on its AVC curve.
A. loss-maximizing
B. shut down
C. break-even
D. profit-maximizing
Answer: B
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If supply and demand both simultaneously increase,
A. the effect on the market clearing price is indeterminate, and the equilibrium quantity definitely rises. B. the market clearing price definitely rises, and the equilibrium quantity definitely falls. C. the market clearing price definitely rises, and the effect on the equilibrium quantity is indeterminate. D. the market clearing price definitely falls, and the effect on the equilibrium quantity is indeterminate.
Use the diagram of two product supply curves to answer the following question.
The diagram indicates that
A. over range Q1Q2 price elasticity of supply is the same for the two curves. B. over range Q1Q2 price elasticity of supply is greater for S2 than for S1. C. over range Q1Q2 price elasticity of supply is greater for S1 than for S2. D. not enough information is given to compare price elasticities.
The value of goods produced, but unsold, in the current period is:
A. allocated to GDP in future periods when the goods are sold. B. counted in GDP as inventory investment. C. counted in GDP as consumption spending. D. excluded from GDP.
The water and diamonds paradox of value
A) is that water is essential for life and yet is cheap, whereas diamonds are totally nonessential and yet are expensive. B) points out that we generally have a low total utility of water and a high total utility of diamonds. C) is resolved by the principle that market price is determined by total utility, not marginal utility. D) none of the above