Fred runs a fishing lodge and has a very profitable business during the summer. In the fall, the number of guests at the lodge starts to decline. Fred should keep the lodge open:
A. only during those months in which his total revenue exceeds his fixed cost.
B. all year because his summer profits offset any losses he might have in the winter.
C. only during those months in which his total revenue exceeds his total cost.
D. only during those months in which his total revenue exceeds his variable cost.
Answer: D
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Which of the following is the correct statement of the marginal rule for optimal input proportions? The input proportion is optimal when
A. PA= PB. B. MPPA= MPPB. C. PA×MPPA= PB×MPPB. D. PA/PB= MPPA/MPPB.
When considering the impact of institutions and policies on economic performance, it is most important to focus on
a. long-term economic growth. b. short-term economic growth. c. business cycle fluctuations. d. the labor force participation rate of married women.
The accompanying graph depicts demand.
At point A, demand is:
A. perfectly elastic. B. inelastic. C. elastic. D. unit elastic.
A business fluctuation when the pace of business activity is speeding up is known as
A. a recession. B. an expansion. C. a trough. D. a contraction.