Recall the Application about the break-even price for growing switchgrass, a perennial grass that is native to the U.S. plains states and is used to create biofuel, to answer the following question(s).Recall the Application. If the minimum average total cost for switchgrass farmers is $55 per ton and the minimum average variable cost is $40 per ton, then at a price of $50 per ton in the short run the switchgrass farmer will:
A. shut down, that is, bring no switchgrass to market.
B. operate and lose money.
C. make a zero economic profit.
D. make a positive economic profit.
Answer: B
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If the Fed's monetary policy reaction function does not change, then when inflation increases the Fed responds by ________ the real interest rate, which ________ consumption and investment spending, which ________ output.
A. increasing; increases; decreases B. decreasing; decreases; decreases C. increasing; decreases; decreases D. increasing; increases; increases
The short-run cost function is:
a. where all inputs to the production process are variable b. relevant to decisions in which one or more inputs to the production process are fixed c. not relevant to optimal pricing and production output decisions d. crucial in making optimal investment decisions in new production facilities e. none of the above
According to Table 2.1, which presents hypothetical data on price elasticity of demand, which good's demand is most sensitive to changes in price?
A. Car Repair
B. Bread
C. Electricity
D. Lamb
Government intervention in the form of binding price floors or binding price ceilings will:
A) always enhance the efficiency of the market. B) result in either surpluses or shortages. C) move the market toward its equilibrium quantity more quickly. D) often be seen as necessary to decrease the activity of black markets.