If a business that produces athletic shoes sees its average variable cost drop as it produces more shoes, which of the following must be true?
a. The marginal cost of producing the additional shoes was less than the firm’s average variable cost.
b. The cost of rubber is relatively stable despite increasing demand.
c. The business is successfully increasing its total number of workers.
d. In the long run material costs decline because they are spread over larger output.
a. The marginal cost of producing the additional shoes was less than the firm’s average variable cost.
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Starting from long-run equilibrium, a war that raises government purchases results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; potential C. higher; higher D. lower; higher
50% of the national income in an economy goes to labor. If this economy has a Cobb-Douglas production function, ________ of its national income should go to capital
A) 50% B) 15% C) 20% D) 30%
If Year 1 is the base year, the CPI for Year 2 is approximately
A) 100.0. B) 126.3. C) 131.3. D) 181.0.
Consider the following pairs of goods. For which of the two goods would you expect the demand to be more price elastic? Why?
a. water or diamonds b. insulin or nasal decongestant spray c. food in general or breakfast cereal d. gasoline over the course of a week or gasoline over the course of a year e. personal computers or IBM personal computers