When marginal cost is less than average total cost, ________ as output increases.
A. average variable cost must be decreasing
B. average total cost must be decreasing
C. average fixed cost must be increasing
D. average total cost must be increasing
Answer: B
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Which of the following represents key strengths of the market economy as a system of allocation? a. Goods and services are allocated based on willingness and ability to pay,rather than based on need
b. Producers have strong incentives to innovate because successful innovatorsare rewarded with higher profit. c. Since price is freely set based on supply and demand, shortages and surplusesare minimized. d. All of the answers above are correct.
One of the basic economic defences of economic growth rests on the conclusion that:
What will be an ideal response?
This chapter stressed the importance of using appropriate samples for empirical studies. Consider the following two problems in that light
a. You are given a class assignment to find out if people's political leanings affect the newspaper or magazine that they read. You survey two students taking a political science class and five people at a coffee shop. Almost all the people you have spoken to tell you that their political affiliations do not affect what they read. Based on the results of your study, you conclude that there is no relationship between political inclinations and the choice of a newspaper. Is this a valid conclusion? Why or why not? b. Your uncle tells you that the newspaper or magazine that people buy will depend on their age. He says that he believes this because, at home, his wife and his teenage kids read different papers. Do you think his conclusion is justified?
If the price of a competitive firm's output increases, the firm responds in the short run by demanding more labor
What will be an ideal response?