When marginal cost pricing occurs
A) price equals the additional cost society incurs in producing the next unit of an item.
B) the firm can only break even if it does not set price to marginal cost.
C) price equals average variable cost but exceeds average total cost.
D) the firm is at the shutdown point.
A
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Variables measured at current market prices are nominal, rather than real. In what sense are nominal variables unreal?
What will be an ideal response?
A nominal anchor helps policy makers to avoid ________
A) adaptive expectations B) constrained discretion C) negative demand shocks D) the time-inconsistency problem
If the price level rises, the aggregate expenditure curve shifts downward and the economy moves up the aggregate demand curve
Indicate whether the statement is true or false
Policy makers should manage aggregate demand so that it grows in line with the economy's capacity to produce. This task is the realm of
a. growth policy. b. stabilization policy. c. labor policy. d. inflation policy.