Mrs. Smith operates a business in a competitive market. The current market price is $7.50 . At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25 . Mrs. Smith should
a. shut down her business in the short run but continue to operate in the long run.
b. continue to operate in the short run but shut down in the long run.
c. continue to operate in both the short run and long run.
d. shut down in both the short run and long run.
d
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Which one of the following is a function of the Federal Reserve System?
A) providing the economy with currency B) serving as a lender of last resort C) providing a system for check clearing D) all of the above
When a person does not have to pay the full costs for using a scarce resource, then there is
A) an underproduction of a good. B) a negative externality. C) a positive externality. D) too little economic profit in the activity.
Economists assume that the goal of consumers is to
A) do as little work as possible to survive. B) make themselves as well off as possible. C) spend all their income. D) consume as much as possible.
An open economy is one that trades with other nations in goods and services, and perhaps also trades in financial assets.
Answer the following statement true (T) or false (F)