Explain why the marginal cost curve intersects average total cost at the point of minimum average total cost.
What will be an ideal response?
Suppose that marginal cost is below average total cost. This will have the effect of dragging down the average (think about what happens to your 3.5 grade point average if you get a D in economics!). Now suppose that the marginal cost is above the average total cost. This will lead to the average total cost increasing. So average total cost is at a minimum when the marginal cost exactly equals the average total cost.
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The social interest theory of regulation is that
A) regulators help producers maximize economic profit. B) regulation seeks to increase the government's revenue. C) regulation causes producers to produce at a point where they are earning normal profits. D) regulation seeks an efficient use of resources. E) regulation focuses on the consumers' interests and ignores producers' interests.
If the nominal interest rate is 7 percent and the inflation rate is 1 percent, the real interest rate is approximately
A) 7 percent. B) 6 percent. C) 8 percent. D) -6 percent.
In facilitating the transition from a centrally planned to a market-oriented economy, explain the difference between the "shock therapy" versus "gradualism" approach
What will be an ideal response?
If the cost of variable inputs used in a firm's production process rose, which of the following would not occur?
a. Its AVC curve would shift up. b. Its ATC curve would shift up. c. Its MC curve would shift up. d. Its AFC curve would shift up.