Suppose that price is below the minimum average total cost but above the minimum average variable cost. In the short run, a firm that is a price taker would:
A. immediately shut down and get out of the industry.
B. continue to produce a quantity such that marginal revenue equals marginal cost.
C. shut down temporarily, in hopes of restarting in the near future.
D. cut price and expand output in hopes of achieving economies of scale
Answer: B
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The tragedy of the commons was avoided in the Middle Ages in much the same way economist Elinor Ostrom's research suggested. Which of the following ways reflects Ostrom's findings, and was actually conducted in the middle ages?
A) Common grounds were sold to individuals. B) Local law enforcement monitored entry into the commons. C) There was social pressure to uphold traditionally accepted limits on family. D) The government imposed a tax for the use of the commons.
If good weather conditions result in a larger than normal crop of peaches, then the
A) equilibrium price of peaches rises, and the equilibrium quantity of peaches increases. B) equilibrium price of peaches falls, and the equilibrium quantity of peaches increases. C) demand curve for peaches shifts leftward. D) increase in the supply of peaches induces a greater demand for peaches, so that the equilibrium price rises and the equilibrium quantity increases. E) equilibrium price of peaches falls, and the equilibrium quantity of peaches decreases.
Use a long-run average cost curve graph to illustrate how diseconomies of scale would not make it beneficial for two companies to go through with a merger
What will be an ideal response?
Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion. b. $20 billion. c. $50 billion. d. $80 billion.