Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf ball production, Kevin has marginal costs equal to $1, and AVC is rising. If the market price of golf balls is $2, Kevin should:
A. decrease the level of golf ball production.
B. continue producing the current level of production.
C. increase the production of golf balls.
D. shut down and produce no golf balls.
Answer: C
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Refer to Figure 27-3. In the graph above, suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by Congress and the president?
A) a decrease in government purchases B) a decrease in income taxes C) a decrease in interest rates D) an increase in the money supply
Assume the LRAC curve for a particular industry hits its minimum point at a relatively low level of output and then increases, and the demand for industry output is quite large
In this case, consideration of the minimum efficient scale of operation suggest that the market should be served by: A) a large number of small firms to minimize production costs. B) a small number of large firms to minimize production costs C) a large number of large firms to minimize production costs. D) an indeterminate number of firms of indeterminate size to minimize production costs.
When a seller knows more about the condition of a used car than the buyer does, the information is said to be asymmetric
a. True b. False
What typically happens to the inflation rate when unemployment falls to very low levels?
(A) It will rise or fall but not with the unemployment rate. (B) It falls. (C) It stays the same. (D) It rises.