A firm can always increase its output by one unit at a marginal cost of $10. Its marginal cost curve is
A. a horizontal line.
B. a vertical line.
C. a ray with slope equal to 10.
D. exactly one-tenth as steep as its total cost curve.
Answer: A
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Consider a good whose consumption takes place publicly. Your decision to buy that good depends
A) both on the characteristics of the product and on how many other people are buying the good. B) only on the price of the good. C) only on how many other people buy the good. D) only on the characteristics of the good.
It can be shown that differences in "beforetrade" relative prices will determine:
a. which nation has the absolute advantage. b. which good each nation will export or import. c. the quantity traded by each nation. d. which nation has the comparative advantage.
A 2 percent increase in the price of shoes leads to a 5 percent decrease in the quantity demanded of shoes. The absolute price elasticity of demand is
A. 2.5. B. 0.2. C. 1. D. 0.4.
If a vintner has a comparative advantage in producing wine,
A. wine is the only product he can produce. B. he can produce wine at a lower opportunity cost than other vintners. C. he also has an absolute advantage in producing wine. D. he can produce more wine using the same resources than other vintners.