Average total cost tells us the
a. total cost of the first unit of output, if total cost is divided evenly over all the units produced.
b. cost of a typical unit of output, if total cost is divided evenly over all the units produced.
c. cost of the last unit of output, if total cost does not include a fixed cost component.
d. variable cost of a firm that is producing at least one unit of output.
b
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Suppose that a company produces at a point where its MR is $430 and its MC is $105, this implies that
a. the firm earns a total profit of $325 at that output level b. the firm’s total costs are rising faster than its total revenue c. the firm’s total profit is rising, suggesting that the firm should expand production d. each unit of output generates an average profit of $325
People complain that inflation increases the cost of goods and services and therefore reduces their purchasing power. If inflation and income grow at the same rate, is this complaint valid? Explain carefully
What will be an ideal response?
The ceteris paribus assumption is important in economics because
A) all empirical data are equal. B) it would be impossible to relate the effects of changes in one variable on another without holding some variables constant. C) economic data move very slowly over time and so they can always be considered constant. D) models are always complex and require as many variables as possible.
Which furniture production process would have the highest furniture prices?
a. furniture made by handsaw and hammer b. furniture made with power equipment c. furniture made by grade school-educated workers d. furniture made in an automated furniture factory