Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:
A. should shut down.
B. should continue to produce since total revenue exceeds total variable cost.
C. is earning a positive economic profit.
D. can increase profit by increasing output.
Answer: A
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Assume two goods are substitutes. Ceteris paribus, a decrease in the price of one good will cause the equilibrium price of the other good to
A. Decrease and the equilibrium quantity of the other good to decrease. B. Decrease and the equilibrium quantity of the other good to increase. C. Increase and the equilibrium quantity of the other good to decrease. D. Increase and the equilibrium quantity of the other good to increase.
The demand for euros would come from
A. American exports to Europe. B. European demand for U.S. government bonds. C. American demand for European real estate. D. All of the above are correct.
The demand for Egg McMuffins will likely be ________ the demand for breakfast foods.
A. equally price elastic as B. less price elastic than C. more price elastic than D. indeterminate from the given information
Autonomous consumption equals total consumption when ___________________.
Fill in the blank(s) with the appropriate word(s).