If the loss-minimizing output for a perfectly competitive firm is zero, then, at all other output levels,
a. price must be greater than average variable cost
b. the marginal cost curve must slope downward
c. marginal cost is less than marginal revenue
d. total revenue is less than total variable cost
e. total revenue is less than average variable cost
D
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If the economy were producing at point E and moves to point D,
A. resources will shift from producing capital goods to producing consumer goods.
B. resources will shift from producing consumer goods to producing capital goods.
C. more capital goods can be produced without any sacrifice in consumer goods production.
D. more consumer goods can be produced without any sacrifice in capital goods production.
A change in taxes of a given amount shifts the consumption function vertically by ____ than that amount, because the marginal propensity to consume is ____
a. less; less than 1 b. greater; greater than 1 c. greater; always equal to 1. d. less; equal to zero.
If economies of scale exist for a particular production relationship, long-run average costs will
a. rise. b. fall. c. first rise and then fall. d. be unaffected since there is no direct relationship between the two.
Music compact discs are normal goods. What will happen to the equilibrium price and quantity of music compact discs if musicians accept lower royalties, compact disc players become cheaper, more firms start producing music compact discs, and music lovers experience an increase in income?
a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.