Karlos sells his product for $40 each in a competitive price-taker market. At his present rate of output, his marginal cost is $39, average variable cost is $25, and average total cost is $45 . To improve his profit/loss situation, Karlos should
a. increase output
b. reduce output but not to zero
c. maintain the present rate of output
d. shut down
e. raise the price
A
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People eat at restaurants less often when their incomes fall because of a recession. Eating at restaurants must be
A) an inferior good. B) a normal good. C) a complement to other goods. D) a substitute for other goods. E) an inelastic good.
In an economy, 40 million people are employed, 2 million are unemployed, and 8 million are not in the labor force. What is the labor force participation rate?
A) 83 percent B) 84 percent C) 80 percent D) 87.5 percent
In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________
A) price elasticity of demand; number greater than 1 (in absolute value) B) cross-price elasticity; positive number C) cross-price elasticity; negative number D) price elasticity of demand; number less than 1 (in absolute value)
Jan is a hyperbolic discounter. She puts weight 1 on utility earned in the current period but only weight .5 on utility earned in future periods. In period 1 she comes up with a plan, which involves taking some action that leads to a loss of C utils in period 2 but provides a benefit of B utils in period 3 . What values of B and C will lead her to behave inconsistently and not follow through on
her plans? a. C < B < 2C. b. B < C. c. B > 2C. d. B < C < 2B.