Suppose you are producing where MC = AVC = $3 and this is loss minimizing. If market reports predict that the price of your product will reach a long-run equilibrium level that is $4 higher than it is today, you should
a. increase output in advance of the expected price increase
b. remain in business
c. shut down
d. remain in business only if your most efficient production level has an average total cost less than or equal to $7
e. shut down until the price increases, then get back in business
D
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When costs spill over to third parties, there is a(n)
A) cost overrun. B) excessive competition. C) negative externality. D) government subsidy.
Suppose that no externalities are generated by the production of chickens. If the price of chickens is equal to private marginal cost of producing chickens, then
a. that price is lower than the price associated with an efficient allocation of resources b. that price is higher than the price associated with an efficient allocation of resources c. that price is precisely the price associated with an efficient allocation of resources d. less than an efficient quantity is being produced e. more than an efficient quantity is being produced
A profit-maximizing firm should hire an input as long as the
A. marginal revenue product of the input is at least as much as the cost of hiring the input. B. marginal revenue product of the input is greater than the marginal revenue product of other inputs the firm is using. C. price of the input doesn't exceed the price of the other inputs used in the firm's production. D. firm can increase its total revenue.
In the short-run, following the opening of trade
A. inputs move across sectors, but input returns remain constant. B. workers in all sectors will receive lower wages due to cheap imports. C. factor payments in the import-competing sectors will decline. D. the supply of resources to the export-oriented sectors will decline.