If the market price of a product falls and as a result total revenue of firms falls, we can conclude that
A) demand is elastic in this price range.
B) the product's price is above the midpoint of its demand curve.
C) demand is inelastic in this price range.
D) the demand curve is horizontal.
C
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The measurement of GDP handles underground production by
A) including the amount produced in this sector of the economy in exactly the same way that all other production is included. B) omitting it because underground production is unreported to the government by the people involved. C) adding it at fixed prices that change only infrequently. D) adding an estimate of it because it is difficult to precisely measure underground production. E) omitting it because, being illegal, it has no effect on the nation's total production.
The change in consumption that results when a price change moves the consumer along a given indifference curve to a point illustrating the new marginal rate of substitution is called the
a. income effect. b. substitution effect. c. Giffen good effect. d. inferior good effect.
As output rises, average fixed cost __________.
Fill in the blank(s) with the appropriate word(s).
Suppose that in a perfectly competitive market, the market price is $10. A firm in that market has marginal cost of $10, average total cost of $12, and it is producing 100 units. The firm is
A. earning zero total economic profits and is not maximizing economic profits. B. incurring $200 in total economic losses and is minimizing economic losses. C. earning $1,000 in total economic profits and is maximizing economic profits. D. earning $200 in total economic profits and is maximizing economic profits.