The market price for wallets is $20. Your technology is such that at your most efficient production point, the average total cost of producing a wallet is $2.50. Your manager runs into your office and shouts, "Boss!!! Average costs are rising!! Average costs are rising!!" To make a profit-maximizing decision, you should:
A. ask the manager about the average total cost.
B. immediately stop production.
C. completely ignore your manager.
D. ask the manager about the marginal cost.
Answer: D
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Suppose demand for a good is QD = 100 - P and supply is QS = -20 + P. What is the consumer surplus?
a. 200 b. 400 c. 600 d. 800
Other Significant Entities Contributing to Federal Reserve Functions
What will be an ideal response?
In the long-run, profit maximizing monopolists
A. never make positive economic profits. B. price where MC and price are equal. C. will produce where MC is below long run ATC. D. produce where average total costs are minimized.
The circular flow model shows that the labor supplied by households takes place in the:
a. Money markets b. Resource markets c. Stock markets d. Product markets