What is minimum efficient scale? Why is it important?
What will be an ideal response?
Minimum efficient scale (MES) is the lowest rate of output per unit of time at which long-run average costs for a particular firm are at a minimum. If the MES is small relative to industry output, firms will be relatively small and numerous. If the MES is large relative to industry output, firms will be large and few.
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Suppose Bob works for Mary as a proofreader. Mary and Bob fall deeply in love, marry, and have eight children. Bob stops working for Mary in order to care for the children. What will be the effect on GDP?
A) GDP will not change. B) GDP will increase. C) GDP will decrease. D) GDP may increase or may decrease depending on inflation.
If the real wage needs to decrease to restore equilibrium in a labor market, this can happen by
A) keeping the nominal wage constant and allowing deflation to allow the real wage to decline. B) keeping the nominal wage constant and allowing inflation to allow the real wage to decline. C) raising the nominal wage and allowing deflation to allow the real wage to decline. D) raising the nominal wage so long as there is no inflation occurring in the economy.
Under asymmetric information,
a. you never get what you pay for b. you sometimes get cheated c. you always get cheated d. at best you get what you pay for e. sellers make profits in excess of competitive returns
If a firm's output equals 10, product price equals $5.00, TFC = $8.00, and TVC = $60.00, then AVC would equal
a. $.80 b. $1.00 c. $6.00 d. $60.00 e. $8.00