Average variable cost and average total costs get closer together as output increases because
A. economies of scale become apparent.
B. marginal costs decrease as output increases.
C. average fixed costs decrease as output increases.
D. diminishing returns set in.
Answer: C
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Eight years ago you purchased an asset for $100,000 that has yielded a nominal capital gain of $30,000. If you sold the asset today, your inflation-adjusted capital gains would be zero due to inflation over the last eight years
The capital gains tax is 28 percent. If you sold the asset today your tax liability would be A) zero. B) $28,000. C) $8,400. D) cannot be determined without more information.
What is a major disadvantage in the use of import barriers to make domestic goods cheaper?
(A) The line between imported and domestic goods becomes harder and harder to draw. (B) Domestic manufacturers may lose the economic incentive to produce their cars less expensively. (C) Import manufacturers stop trying to send their goods to the country that has import barriers. (D) Domestic manufacturers create more jobs
Suppose the United States is entering a recession at the same time that it has agreed to work toward eliminating its trade deficit. Considering the effect of monetary policy on trade through its impact on income only:
A. a contractionary monetary policy would be the appropriate means of achieving both objectives. B. an expansionary monetary policy would be appropriate to eliminate the trade deficit, but contractionary monetary policy is called for to deal with the recession. C. a contractionary monetary policy would be appropriate to eliminate the trade deficit, but expansionary monetary policy is called for to deal with the recession. D. an expansionary monetary policy would be the appropriate means of achieving both objectives.
In order for an increase in aggregate demand to raise Real GDP and the price level, the aggregate supply curve must be ____________________. If an increase in aggregate demand raises the price level but leaves Real GDP unchanged, the aggregate supply curve must be _____________________
A) upward-sloping; vertical B) upward-sloping; horizontal C) downward sloping; vertical D) vertical; upward-sloping E) vertical; downward-sloping