If the market price is lower than a perfectly competitive firm's average total cost, the firm will
A) immediately shut down.
B) continue to produce if the price exceeds the average fixed cost.
C) continue to produce if the price exceeds the average variable cost.
D) shut down if the price exceeds the average fixed cost.
E) shut down if the price is less than the average fixed cost.
C
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Why is the tax multiplier smaller (in absolute value) than the autonomous spending multiplier?
What will be an ideal response?
Break-even analysis usually assumes all of the following except:
a. in the short run, there is no distinction between variable and fixed costs. b. revenue and cost curves are straight-lines throughout the analysis. c. there appears to be perfect competition since the price is considered to remain the same regardless of quantity. d. the straight-line cost curve implies that marginal cost is constant. e. both c and d
Fixed prices in a free-market economy can increase efficiency
a. True b. False Indicate whether the statement is true or false
Which is the most accurate statement?
A. We are living well beyond our means and we face an imminent financial crisis as foreigners refuse to accept U.S. dollars. B. We cannot continue running huge current account deficits. C. We can easily run up larger and larger current account deficits without any serious consequences. D. Large and growing current account deficits are good for our economy.