A profit-maximizing firm will continue to expand output:
A. as long as the revenues from the production and sale of an additional unit exceeds the average cost of the unit.
B. until the average cost of producing the good or service is at a minimum.
C. as long as the revenues from the production and sale of an additional unit exceeds the marginal cost of the unit.
D. until the marginal cost of producing a good or service is at a minimum.
Answer: C
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The short run is best defined as:
A. a period of time sufficiently short that at least one factor of production is fixed. B. one year or less. C. the period of time between quarterly accounting reports. D. a period of time sufficiently short that all factors of production are variable.
If the government increases military spending ________
A) the IS curve would shift to the left B) output will decrease if interest rates remain fixed C) the unemployment rate could fall D) all of the above E) none of the above
If the price of the good described in Exhibit 4-1 is $1.60, then an economist would expect the
a. price to decrease to $1.40 b. price to decrease to $1.50 c. quantity supplied to increase to 50 units d. quantity demanded to increase to 80 units e. quantity demanded to increase to 90 units
To correct for the social impact of pollution, the government should levy a per-unit tax
A. according to the business activity of the polluter. B. that is the same for all polluters regardless of their locations or sizes. C. only to those polluters that can afford to pay for the tax. D. according to the economic damage of the pollution.