Which of the following is true at the output level where average total cost is at its minimum?
A) Marginal cost equals average total cost.
B) Average variable cost equals fixed cost.
C) Marginal cost equals average variable cost.
D) Average total cost equals average fixed cost.
Answer: A
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An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to
A) 1.80. B) 0.55. C) 0.75. D) 0.40.
In New Keynesian analysis, firms are assumed to be
A) interested solely in maximizing their profit. B) interested in both their profit and the avoidance of business cycles. C) interested solely in avoiding business cycles. D) interested solely in maximizing production.
Refer to the payoff matrix below. In reference to the Nash equilibrium/equilibria in this game, which of the following is true?
Cruise R Us and Cruise the World compete in the cruise line industry. Each firm needs to determine if they are going to offer special cruise packages with special rates or not offer the specials. The above payoff matrix shows the firms' net economic profit for each set of strategies.
A) Cruise R Us No Specials and Cruise the World No Specials is a Nash equilibrium.
B) There are no Nash equilibria in this game.
C) Cruise R Us Specials and Cruise the World No Specials is a Nash equilibrium.
D) Cruise R Us Specials and Cruise the World Specials is a Nash equilibrium.
The change in the quantity demanded of gas because of increasing gas prices over the last decade:
A. was more elastic than it has been in the last six months. B. was less elastic than it has been in the last six months. C. has been relatively the same over both time periods. D. has become a non-issue for people now that they are used to higher gas prices.