In the short run if price is below average variable cost the firm will
A. go out of business.
B. stay in business.
C. shut down.
D. operate.
C. shut down.
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The slope of the AE curve is .80. What is the expenditure multiplier? Everything else the same, by how much does equilibrium aggregate expenditure increase if
a. exports increase from $1.75 trillion to $2.25 trillion? b. government expenditure on goods and services decrease from $2.0 trillion to $1.8 trillion? c. investment increases from $1.2 trillion to $2.3 trillion?
If Fuel is Us is in tacit collusion with four smaller propane delivery firms and Fuel is Us consistently makes price changes that the other four firms then also make, this is an example of ________ by Fuel is Us.
A) a meet-or-release clause B) price leadership C) a meet-the-competition clause D) a precommitment
Suppose the government imposes a 20-cent tax on the sellers of iced tea. Which of the following is not correct? The tax would
A. discourage market activity. B. reduce the equilibrium quantity. C. raise the equilibrium price by 20 cents. D. shift the supply curve upward by 20 cents.
In a perfectly competitive constant-cost industry:
A. there is no way to predict what will happen to factor prices as industry output increases. B. factor prices rise as industry output increases. C. factor prices fall as industry output increases. D. factor prices do not change as industry output increases.