If the price is less than the average variable cost, then
A. the loss the firm makes from shutting down (its TFC) is less than the loss they make as a result of producing.
B. the firm should produce where MC=MR.
C. the loss the firm makes from shutting down (its TFC) is greater than the loss they make as a result of producing.
D. the firm should produce where AVC is minimized.
Answer: A
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Assume that the production of a good imposes external costs upon third parties. If the price and quantity of this good is set by supply and demand the price will be too:
a. high and quantity too low for efficient resource allocation. b. low and quantity too low for efficient resource allocation. c. low and quantity too high for efficient resource allocation. d. high and quantity too high for efficient resource allocation.
A decrease in price will lead to an increase in demand.
a. true b. false
International reserves are:
A. dollars held by the Federal Reserve to support the value of the dollar. B. reserves held by banks to back international deposits. C. foreign currency deposits held by banks to provide international liquidity for domestic customers. D. foreign currency assets held by a government for the purpose of purchasing domestic currency in the foreign exchange market.
What is meant by the term "government-imposed barrier to entry"? Why would a government be willing to impose barriers to entering an industry?
What will be an ideal response?