As a firm increases the level of output that it produces, short-run average fixed cost
A) rises and then falls.
B) remains constant since fixed costs are constant.
C) decreases.
D) decreases up to a particular level of output and then increases.
Answer: C
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Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
Which of the following economic activities is ignored in GDP accounts?
A) The market value of medical services B) The market value of educational services C) The market value of illegal drugs D) The market value of prescription drugs E) The market value of the services associated with used-car dealers
How will an increase in government expenditures during a recession be reflected in GDP?
a. An increase in government spending will reduce aggregate demand and decrease GDP. b. An increase in government spending will not affect GDP. c. An increase in government spending will increase GDP, but only if it is directed toward economically productive projects. d. The government spending will increase GDP even if the spending encourages rent seeking and other unproductive activities.
A market has four individuals, each considering buying a grill for his backyard. Assume that grills come in only one size and model. Abe considers himself a grill-master, and finds a grill a necessity, so he is willing to pay $400 for a grill. Butch is a meat-lover, honing his grilling skills, and is willing to pay $350 for a grill. Collin just met the girl of his dreams, and she loves a good grilled steak, so in his effort to impress her he is willing to pay $320 for a grill. Daniel loves grilled shrimp and thinks it might be cheaper in the long run if he buys a grill instead of eating out every time he wants grilled shrimp, so he is willing to pay $200 for a grill.If the market price of grills falls from $375 to $330, given the scenario described, which of the following can be said?
A. Butch will join the market, but receive no consumer surplus. B. Abe will experience a decrease in consumer surplus of $45. C. Abe will experience an increase in consumer surplus of $45. D. Butch and Collin will join the market, and together will receive $30 in consumer surplus.