If a firm is operating in the range of economies of scale, and if it is currently at the minimum point of its short-run average total cost curve, explain what action it can take to reduce its costs, if it does not want to change the quantity of output that it is producing
It can increase its fixed capital. This will move it to a new short-run average total cost curve that is closer to
(or tangent to) the envelope curve at the desired level of output.
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Four possibilities have probabilities 0.4, 0.2, 0.2 and 0.2 and values $80, $30, $0, and -$80 respectively. The expected value is:
a. $22 b. $24 c. $26 d. $28
According to the market demand curve, what would consumers in this market most likely do if the price per pound decreased from $3 to $1?
a. They would decrease their purchases of coffee by about half the amount.
b. They would decrease their purchases of coffee by one third the amount.
c. They would increase their purchases of coffee by more than double the amount.
d. They would increase their purchases of coffee by less than double the amount.
The town of Pleasantville has two local TV stations. If one of them invests in the newest weather forecasting technology, one can predict that:
A. both stations eventually will switch back to the old weather forecasting technology. B. the quality of weather forecasts will remain unchanged. C. the other station will upgrade its weather forecasting technology. D. the other station will continue to use its current weather forecasting technology.
If there was a conspiracy to fix prices, but the conspiracy did not succeed, the government can still take the conspiring firm to court for improper conduct. This situation would be an example of:
A. The rule of reason B. A cease-and-desist order C. A per se violation D. Tying contracts