In the short run, a purely competitive seller will shut down if:
A. it cannot produce at an economic profit.
B. price is less than average variable cost at all outputs.
C. price is less than average fixed cost at all outputs.
D. there is no point at which marginal revenue and marginal cost are equal.
Answer: B
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Burger King is paying $9 an hour to its workers. If the expected inflation rate equals the actual inflation rate and both are 10 percent a year, then to keep the real wage rate constant in a year the money wage rate must
A) fall to $8.10 an hour. B) rise to $9.45 an hour. C) rise to $10.00 an hour. D) rise to $9.90 an hour. E) stay at $9.00 an hour.
Ten individuals have $100 and identical preferences for picnics, p, and kayak trips, k, where U(p, k) = k0.5p0.5. The price of picnics is $5 and the price per kayak trip is $ 10
What is the shortage/surplus in the market when the supply of picnics totals 120? A) There is a surplus of 20. B) There is a shortage of 20. C) The market is in equilibrium. Therefore, there is no surplus/shortage. D) There is not enough information to answer this question.
Which of the following factors can influence the production possibilities frontier in the future?
a. The amount of capital produced b. A fall in the rate of inflation c. A decrease in consumption in an economy d. An increase in the tax rate e. A legal reform that increases transaction costs
In which of the following scenarios would the income effect be most likely to be greater than the substitution effect?
A. An increase in the minimum wage B. A tax on fast foods C. An increase in salaries for surgeons D. An increase in wages for day laborers