Refer to the graph shown. Assuming a $0.10-per-gallon marginal cost external to the trade that is associated with gasoline, the market price of gasoline necessary to induce consumers to purchase the efficient quantity each year is:
A. $0.95.
B. $1.05.
C. $1.00.
D. $1.10.
Answer: B
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The decision about what goods and services will be produced in a market economy is made by
A) consumers and firms choosing which goods and services to buy or produce. B) consumers dictating to firms what they need most. C) workers deciding to produce only what the boss says must be produced. D) producers deciding what society wants most. E) lawmakers in the government voting on what will be produced.
By shutting down when price is less than average variable cost at the profit-maximizing level of output, a perfectly competitive firm will limit its losses to its:
A) total variable costs. B) total costs. C) total fixed costs. D) marginal costs.
When oligopolists take into account their competitors' behavior, this situation is called:
a. mutual interdependence. b. monopolistic competition. c. independent. d. price discrimination. e. loss minimization.
The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
What is AVC at its minimum?
A. $100 B. $80 C. $50 D. $8 E. $35