The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?
ATC = AVC + AFC, so the vertical distance between the AVC and ATC curves is the value of AFC for that level of output. Both AVC and ATC are typically U-shaped. The vertical distance between the two curves is steadily declining as output increases because AFC is steadily declining. Said another way, the two curves move closer together as output increases.
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A firm that accepts deposits from savers, and then use these deposits to make loans, is a
a. money market multiplier b. Federal Reserve bank c. financial intermediary, such as a bank d. stock broker or bond broker e. fractional reserve holder
As more and more of a particular good is produced, which of the following rises?
a. Opportunity costs b. Unemployment c. Marginal revenue d. Profits e. Employment
The responsiveness of demand to changes in income holding the good's relative price constant is
A. cross price elasticity of demand. B. elasticity of supply. C. price elasticity of demand. D. income elasticity of demand.
Workers and firms both expect that prices will be 2.5% higher next year than they are this year. As a result
A) workers will be willing to take lower wages next year, but not lower than a 2.5 percent decrease. B) the purchasing power of wages will rise if wages increase by 2.5%. C) the short-run aggregate supply curve will shift to the left as wages increase. D) aggregate demand will increase by 2.5%.