By setting MR = MC, a competitive firm decides to sell 100 units when the market price is $20. The average cost of producing the 100 units is $18 per unit. If the firm has fixed costs of $500, then the firm should
a. shutdown
b. expand production
c. exit the industry
d. increase their price
a. shutdown
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A point on the production possibilities frontier reflects an
A) attainable point with full employment of all resources. B) attainable point without full employment of all resources. C) unattainable point with full employment of all resources. D) unattainable point without full employment of all resources. E) None of the above answers is correct.
If controlling the level of military expenditures is the most important goal, the most appropriate type of procurement contract would be _____
a. fixed fee b. cost plus fixed fee c. cost plus percentage fee d. cost plus incentive fee
One reason some economists are critical of the Lorenz curve is because
A) it reflects income before taxes. B) it reflects income after taxes. C) it reflects only the top bracket of taxpayers. D) it reflects only the poor in the country.
Markets fail when externalities are present
a. because all of the costs and benefits of producing a good are reflected in the market price b. because some of the costs and benefits of producing a good are not reflected in the market price c. only if they are negative; positive externalities are not market failures d. because profits are not maximized e. if the positive externalities are less than the negative externalities