A firm will choose to shut down rather than operate as long as
A. price is greater than or equal to AFC.
B. AVC is greater than AFC.
C. MC is greater than AVC.
D. price is less than AVC.
Answer: D
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Allegiant Air holds a natural monopoly on most of the routes it serves in the United States. Allegiant Air ________ operate on the ________ portion of its demand curve when total revenue is ________
A) will always; elastic; increasing B) will usually; elastic; decreasing C) will never; elastic; increasing D) will always; inelastic; increasing E) will never; inelastic; increasing
Return to the situation with the executive from the previous question. Now assume that shareholders cannot observe effort, so cannot specify how hard the executive works in the contract but must induce it through the incentive scheme. Which of the following wage contracts would work out best for shareholders in equilibrium?
a. A flat wage w = 2,500 with no profit share. b. A share of 35% of the gross profits. c. A share of 55% of the gross profits. d. A share of 70% of the gross profits.
Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
To an economic naturalist, this model helps explain why political candidates:
A. are loyal to their political parties. B. work to bring federally funded projects to their home districts. C. move toward more centrist positions during campaign season. D. take more extreme positions than are held by the general population.
If an economy produced 220 pounds of jelly beans at $5 per pound and 90 pounds of gum drops at $2 per pound in 2016, its real gross domestic product (GDP) was:
A. 310 pounds of candy. B. $180. C. $1,100. D. $1,280.