If average variable cost exceeds average fixed cost at a particular level of output:
a. Profits must be positive
b. That fact is meaningless for deciding the quantity of output to produce.
c. It is more likely that the output level is low relative to the designed capacity of the production facility than that the output level is low relative to the designed capacity of the production facility.
d. Both b and c. are likely true.
b
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Depository institutions are good at minimizing
A) the costs of monitoring borrowers. B) risky borrowers. C) liquidity. D) all of the above.
Entrepreneurs are vitally important for economic progress because they
A) stick with the tried and true methods rather than experimenting with new ways of doing things. B) innovate and discover new ways of bringing items of value to consumers willing to pay for them. C) rely on price controls to determine the prices charged for the items they bring to market. D) rely on government grants and subsidies for the funding of research and development.
Faced with the gamble: heads you win $100; tails you lose $50, we would predict that a risk-neutral person would
A. refuse the gamble. B. take the gamble but insure against any loses. C. be indifferent between taking and not taking the gamble. D. take the gamble.
Which of the following is an example of a tie-in sale?
A. In order to buy Dell Computers, you must also buy Microsoft Windows to get the warranty. B. Bus rides are cheaper for senior citizens than for other people. C. Two companies merge to form one company. D. Prices are set just low enough to prevent other firms from entering the market.