Teddy's Bear Shop operates in a perfectly competitive market where the prevailing price is $15 . Teddy's marginal cost curve crosses his average total cost curve at $20 . The marginal cost curve crosses his average variable cost curve at $17 . In the short run, Teddy's Bear Shop
a. should operate at a lower output level where it can suffer less of an economic loss
b. will suffer an economic loss, but should continue to operate at the minimum of its average variable costs
c. will just break even, with neither a profit nor a loss, and should operate
d. will suffer an economic loss and should shut down
e. should operate at a higher output level where it can suffer less of an economic loss
D
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Supply and demand analysis
a. can be used to understand solutions to pollution, but not causes. b. can be used to analyze how externalities lead to environmental problems. c. cannot be used to analyze pollution, which is a physical and chemical problem. d. cannot be used to solve the pollution problem, but can be used to analyze it.
What might cause diseconomies of scale?
When the supply and/or demand curve shift, the new market clearing price is
A) reached instantaneously. B) reached only after the government intervenes in the market. C) reached after some period of adjustment. D) never reached.
Fiscal policies are government policies regarding ________ and ________.
A. income; saving B. revenues; earnings C. money supply; money demand D. taxes; expenditures