Average cost
A. is always larger than marginal cost.
B. declines for some range of output, hits a minimum, and then increases.
C. is always smaller than marginal cost.
D. is total cost/price of the product.
Answer: B
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The relationship between the interest rate and the precautionary demand for money is
A) nonexistent. B) inverse. C) positive. D) positive sometimes and inverse other times.
The Friedman rule works because
A) it maximizes productivity. B) it eliminates over-consumption. C) it encourages people to hold the appropriate quantity of money. D) it can be implemented by the private sector.
In the long run, competitive firms MUST be profit maximizers because if they do not maximize profits,
A) they will not survive. B) they will not be price takers. C) they will attract entry. D) the profits that they do earn will only cover variable costs.
Other things the same, automatic stabilizers tend to
a. raise expenditures during expansions and recessions. b. lower expenditures during expansions and recessions. c. raise expenditures during recessions and lower expenditures during expansions. d. raise expenditures during expansions and lower expenditures during recessions.