Answer the following questions true (T) or false (F)
1. In the long run, all of a firm's inputs are variable.
2. Costs that change as output changes are called incremental costs.
3. Economic costs include implicit costs but not explicit costs.
1. TRUE
2. FALSE
3. FALSE
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A sudden increase in the U.S. price level
A) makes those with dollar debts worse off. B) makes those with dollar debts better off. C) does not affect those with dollar debts. D) makes those with foreign debts better off. E) increases all dollar debts.
Detrimental externalities like pollution are a shortcoming of the market mechanism. Do they occur in free market economies alone? Explain with examples.
What will be an ideal response?
According to the Laffer curve, an increase in the tax rate will decrease tax revenue
A. if the economy is on the positively sloped section of the curve. B. if the economy is on the negatively sloped section of the curve. C. no matter the location of the economy on the curve. D. if the economy is at the 0% tax rate point on the curve.
Over the range of output where the slope of the short-run total cost curve becomes steeper:
A. Fixed costs are increasing B. Marginal cost is increasing C. Marginal cost is positive, but decreasing D. Marginal cost is lower than average variable cost