Figure 6.4 represents a perfectly competitive firm's costs. Illustrate the firm's shut-down price on the graph. Explain.
What will be an ideal response?
The firm's shut-down price is defined as the price at which the firm is indifferent between operating and shutting down. In Figure 9.4, the shut-down price is $10. At the shut-down price, marginal cost equals price and average variable cost also equals the price. Therefore, marginal cost also equals average variable cost, and so the shut-down price is at the minimum point of the SAVC curve.
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The change illustrated in the figure above is part of the transmission process of the Fed's monetary policy. As a result of the increase in the supply of loanable funds, aggregate demand ________, real GDP ________, and the price level ________
A) increases; decreases; falls B) decreases; decreases; falls C) increases; increases; rises D) increases; does not change; does not change E) None of the above answers is correct.
Demand for a factor can shift for all of the following reasons except?
A. Change in demand for the final product B. Change in the factor's price C. Change in the price of other factors D. Change in technology
To manufacture 1,000 pairs of shoes in a week, a firm must use at least 1,500 workers and 5 machines or 100 machines and 150 workers. Which method can be technically efficient?
A. 1,500 workers and 5 machines B. 150 workers and 100 machines C. Both D. Neither
The economic system that answers the What, How and For Whom questions using prices determined by the interaction of supply and demand is a:
A. market economy. B. command economy C. soviet economy. D. traditional economy.