Suppose the market demand for milk is Qd = 150 - 5P. Additionally, suppose that a dairy's variable costs are VC = 2Q2 (where Q is the number of gallons of milk produced each day), its marginal cost is MC = 4Q and there is an avoidable fixed cost of $50 per day. In the long run there is free entry into the market. Suppose the demand for milk doubles. If in the short run the number of firms is fixed and their fixed costs are sunk, what is the short run equilibrium quantity?
A. 100 units
B. 200 units
C. 50 units
D. 60 units
D. 60 units
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Briefly explain how a change in the personal income tax rate affects aggregate demand
What will be an ideal response?
Under what conditions will a firm's long-run producer surplus exceed their economic rents?
A) The firm requires land resources in the production process. B) The firm has access to specialized tools or technology that other firms do not own. C) The firm has access to knowledge or human capital that other firms do not own. D) The firm is operating in an imperfectly competitive market.
A year-long drought that destroys most wheat crops for the season would shift the:
A. short-run aggregate supply curve only. B. aggregate demand curve only. C. aggregate demand curve, and the short-run aggregate supply curve would shift in response. D. short-run aggregate supply curve and the long-run aggregate supply curve.
The higher the opportunity cost of borrowing, the higher the amount of investment, other things constant.
a. true b. false