Which of the following explains the shape of a total fixed cost curve?
a. It slopes downward because fixed costs decrease as output increases.
b. It slopes upward because fixed costs increase as output rises.
c. It is horizontal because fixed costs do not change with changes in output.
d. It is U-shaped because fixed costs are high at very low and very high output levels.
c. It is horizontal because fixed costs do not change with changes in output.
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A quota will reduce consumer welfare when
A) the quota is less than the amount purchased without the quota. B) the quota is greater than the amount purchased without the quota. C) the quota is on a good with high income elasticity. D) Quotas always reduce consumer welfare.
For third-party certification to overcome the problem of ________, consumers must believe that it is ________.
A) adverse selection; unbiased B) adverse selection; biased C) moral hazard; unbiased D) moral hazard; biased
Suppose all of the major computer manufacturers announced that beginning next month there would be major price reductions on their computers. This would cause the current demand for computers to
a. increase. b. decrease. c. remain unchanged. d. increase if the demand for computers was relatively inelastic, but decrease if the demand for computers was relatively elastic.
Related to the Economics in Practice on p. 455: The Consumer Price Index in the United States was 207.3 in 2007, 215.3 in 2008 and 214.5 in 2009. If a retiree's pension is tied to the CPI, her monthly pension check would have ________ from 2007 to 2008, and ________ from 2008 to 2009.
A. increased; decreased B. decreased; increased C. decreased; decreased D. increased; increased