In Figure 21.4, a firm that produces between 600 and 800 units per period should choose a plant with a short-run average total cost function of
A. ATC2 only.
B. ATC3 only.
C. ATC2 or ATC3.
D. ATC1 only.
Answer: A
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The table gives some data on the supply of roses in a small town. When the price rises from $15 a dozen to $25 a dozen, the elasticity of supply is ________
A) 1.25 B) 5.00 C) 0.20 D) 0.80
Following the lifting of price controls that had been implemented in the early 1970s, inflation skyrocketed. Economists' explanations for this acceleration in the price level include:
a. the increase in the money supply that also occurred during the early 1970s. b. increases in the federal government deficit, especially in 1971 and 1972. c. supply-side shocks in oil and food. d. the release of inflationary pressures that built up during the period of price controls. e. All of the above.
In a perfectly competitive market, a decrease in output could be caused by
a. an increase in consumer demand b. a technological innovation c. a decrease in input prices d. a decrease in consumer demand
Which of the following is a key characteristic of economic freedom?
a. subsidies and regulations that favor business b. central planning c. reliance on open markets d. import quotas that protect domestic businesses from rivals