What is the shape of the average total cost curve for a firm in the short run?
A. U-shaped.
B. A horizontal line.
C. A vertical line.
D. A curve that slopes upward to the right.
Answer: A
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
The stock market boom during the 1990s
A) boosted consumption relative to income. B) depressed the percentage of disposable income saved by households. C) may explain the behavior of household savings during that decade. D) All of the above.
Perfectly competitive firms that earn an economic profit in the short run choose the output that
a. maximizes total revenue b. minimizes total cost c. maximizes the difference between total revenue and total cost d. maximizes the difference between total revenue and explicit cost e. maximizes the difference between total revenue and implicit cost
Which of the following explains the shape of the short-run aggregate supply curve?
a. The inverse relationship between the quantity supplied and the cost per b. The direct relationship between the quantity supplied and the cost per unit c. The direct relationship between the quantity supplied and the price level d. The inverse relationship between quantity supplied and GDP e. The inverse relationship between quantity supplied and the profit per unit