Which of the following statements regarding the relationship between average and marginal costs is INCORRECT?
A) There is always a definite relationship between average and marginal cost.
B) When marginal costs are less than average costs, the latter must fall.
C) When marginal costs are greater than average costs, the latter must rise.
D) There is no way for average variable costs to fall when marginal costs are falling.
Answer: D
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Everything else remaining unchanged, if a new seller enters a market to compete with an existing monopoly that is enjoying economies of scale, it will lead to:
A) higher profits for both firms. B) higher profits for the existing firm. C) lower profits for the existing firm. D) higher market power for the existing firm.
Charitable donations to the Red Cross
A) can be explained by the rational ignorance theory. B) can be explained by the rational self-interest theory. C) cannot be explained by the rational self-interest theory. D) prove that there is no scarcity in the United States.
Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
Suppose $1 = 10.5 pesos in New York and $1 = 9.6 pesos in Mexico City.If you had $10,000 using arbitrage, your profits would be:
a. $937.50. b. 937 pesos. c. 9,600 pesos. d. $790.