If marginal cost is above average total cost, average total cost will
A. decrease.
B. remain constant.
C. be minimized.
D. increase.
Answer: D
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The figure above shows the costs and demand curves for the Bigshow Cable Company. If the regulator wants to set the price so that Bigshow earns the same normal profit as a perfectly competitive firm, what price should be set?
A) $8 B) $6 C) $4 D) $2
One potential weakness of the coordination failure model as an explanation of business cycles is that
A) evidence supporting intertemporal substitution as an important determinant of labor supply is weak. B) evidence supporting the existence of increasing returns at the aggregate level is weak. C) it fails to explain several of the key business cycle regularities. D) it requires that consumers not behave in a rational manner.
The opportunity cost of money is
A) zero. B) the inflation rate. C) the real interest rate. D) the nominal interest rate.
Goods that are both excludable and rival are referred to as _____
a. common resources b. natural resources c. public goods d. private goods