The Razor-Thin Disposable Razor Company is a perfectly competitive firm producing where MR = MC. The current market price of a disposable razor is $3.00. The firm sells 1,800 disposable razors. Its AVC is $2.00 and its AFC is $1.50. What should Razor-Thin do?
A. Decrease production so that AVC will decrease.
B. Shut down and produce zero razors because price is less than ATC.
C. Continue to produce because price exceeds AVC.
D. Increase production so that AFC will decrease.
Answer: C
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b. real GDP. c. personal income. d. net GDP.
Why did the U.S. temporarily operate outside the production possibilities frontier in 1942, 1943, and 1944?
A. The Civil War B. World War I C. The Great Depression D. World War II
Suppose there are ten people playing cards in a room. One of them wants to smoke a cigar, nine of them dislike the smell of cigar smoke. The smoker values the privilege of smoking at $5, and each of the other nine people of the room would be willing to pay fifty cents for clean air in the room. The rules governing use of the room state that smoking is not allowed unless everyone agrees to allow smoking. Declaring the card room a non-smoking area with no opportunity to negotiate would:
A. increase total economic surplus. B. leave total economic surplus unchanged, but redistribute benefits. C. decrease total economic surplus. D. efficiently solve the externality problem.
The following economy produces two products.ProductsProduction Possibilities?ABCDEFTanks012345Autos10009508506503500Refer to the above table. The total opportunity cost of the three units of tanks is:
A. 200 units of autos. B. 1000 units of autos. C. 650 units of autos. D. 350 units of autos.