If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________
A) increases; increases
B) decreases; decreases
C) decreases; increases
D) increases; decreases
B
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A monopolistically competitive firm in short-run equilibrium:
A) will make negative profit (lose money). B) will make zero profit (break-even). C) will make positive profit. D) Any of the above are possible.
Which of the following could explain why hockey players earn such high income?
a. All of the following are correct. b. Average careers are very short; the chances of being unemployed are greater than in many other jobs. c. The income effect encourages them to work more as the wage increases. d. Many people want to become hockey players. e. The threat of injury makes the job more exciting than other jobs.
Which of the following statements is true?
A. The higher the marginal cost, the lower the profit-maximizing price. B. The more elastic the demand, the higher the profit-maximizing markup. C. The more elastic the demand, the lower the profit-maximizing markup. D. The higher the average cost, the lower the profit-maximizing price.
Which of the following would best explain why regulatory capture is a problem?
A. The regulations implemented tend to reduce the profitability of the regulated industry and reduce global competitiveness. B. Regulatory capture unduly increases the size and power of government, increasing costs for taxpayers. C. Individuals implementing the regulations lack expertise about the industry and therefore make poor regulatory choices. D. The regulations implemented serve the private interests of the regulated industry, rather than addressing social interests such as consumer safety and environmental protection.