A price-setting firm faces the following estimated demand and average variable cost functions:Qd = 800,000 - 2,000P + 0.7M + 4,000PRAVC = 500 - 0.03Q + 0.000001Q2where Qd is the quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $53. Total fixed cost is $2,600,000. The firm should ________ because ________.
A. shut down, P = $356 < TVC = $445
B. operate, P = $560 > AVC = $160
C. operate, P = $510 > AVC = $300
D. operate, P = $600 > AVC = $255
Answer: C
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Barbara owns a small shop where dresses are made. At the end of a given month, she has 250 dresses. Her expenses for the month are $1,000 for rent, $6,000 for wages, $1,500 for fabric and thread, and $500 for electricity. Her total variable costs for the month are:
a. c and e. b. $4,000. c. $32 per dress. d. $7,500. e. $8,000.
In order to include many different goods and services in an aggregate measure, GDP is computed using, primarily,
a. values of goods and services based on surveys of consumers. b. market prices. c. quantities purchased by a typical urban household. d. profits from producing goods and services.
is caused by drops in total production.
A. Structural unemployment B. Frictional unemployment C. Seasonal unemployment D. Cyclical unemployment
Decreases in product prices cause the consumer's:
A. budget line to shift outward from the origin. B. production possibilities curves to shift inward to the origin. C. budget line to shift inward to the origin. D. production possibilities curves to shift outward from the origin.