Suppose that a large and a small wind turbine have similar installation, operating, and maintenance costs, but a large turbine has four times the generating capacity but costs less than three times as much as a small turbine. The average cost of generating electricity with wind is:
A. constant at each output.
B. increasing as output increases.
C. decreasing as output increases.
D. at first decreasing and then increasing as output rises.
Answer: C
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Firms decide how much to spend on product development and marketing by
A) spending the same amount as they did in previous years. B) spending the historical average of 1/4 of total production cost. C) determining what it will take to eliminate excess capacity. D) balancing the cost and the benefit of product development and marketing. E) ensuring that the marginal cost of product development and marketing is less than or equal to the marginal cost of producing the good or service.
When current economic conditions are bad, people are ________ inclined to save, and when they predict bad future economic conditions they are ________ inclined to save now.
A. less; less B. more; less C. less; more D. more; more
According to supply-side theory, which of the following would shift the aggregate supply curve leftward?
A. Lower marginal tax rates. B. Government deregulation. C. A higher minimum wage. D. Elimination of structural bottlenecks.
In the short run, a monopolist's economic profits:
A. are always positive because the monopolist is a price-maker. B. are usually negative because of government price regulation. C. are always zero because consumers prefer to buy from competitive sellers. D. may be positive or negative depending on market demand and cost conditions.