A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:
A. marginal cost.
B. average total cost.
C. average variable cost.
D. average fixed cost.
Answer: A
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Why might a VAT be more popular politically than a retail sales tax?
a. Its transparency appeals to voters. b. Its lack of transparency makes it easier to misunderstand its effects. c. It is more efficient per dollar raised. d. It is more consistent with the benefit principle of taxation.
If two different fuel sources (e.g., coal and natural gas) are perfect substitutes in the long-run production of energy. How will a profit maximizing firm choose between these two inputs?
A) The firm will only use the input with lower cost B) The firm will use equal amounts of the two inputs, even if one of the inputs has a lower cost C) The firm will only use the input with higher cost D) The firm cannot achieve a profit maximizing level of output under these circumstances
The standard of living in an economy is best measured by:
A. the inflation rate. B. output per person. C. total output. D. average labor productivity.
The economy is undergoing a recession that has reduced consumers' incomes. In the smartphone market, this will most likely lead to
A. an increase in price and a decrease in quantity. B. an increase in price and an increase in quantity. C. a decrease in price and a decrease in quantity. D. a decrease in price and an increase in quantity.