Refer to Figure 12-5. If the firm's fixed cost increases by $1,000 due to a new environmental regulation, what happens in the diagram above?
A) Only the average variable cost and average total cost curves shift upward; marginal cost is not affected.
B) All the cost curves shift upward.
C) Only the average total cost curve shifts upward; the marginal cost and average variable cost curves are not affected.
D) None of the curves shifts; only the fixed cost curve, which is not shown here, is affected.
C
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Marginal cost crosses the
a. AVC curve at the highest point of the AVC curve. b. ATC curve at the lowest point of the ATC curve. c. AFC curve at the lowest point of the AFC curve. d. ATC curve at the highest point of the ATC curve.
Coase made famous a court case between a doctor and a confectioner. Suppose that exact case happened again and transactions costs were absent. When would we be sure that resources were inefficiently allocated?
a. If the confectioner wins the property right to make his confections. b. If the doctor wins the right to prevent the confectioner from making his confections. c. Zoning laws are changed to prevent the confectioner from manufacturing in the current location. d. The judge forces the parties to bargain until they reach an agreement on who has a right to do what.
For a monopolist, marginal revenue is always
A) greater than price. B) equal to price. C) equal to zero. D) less than price.
Critics argue that society is depleting its energy resources far too quickly. The most likely explanation for this behavior is that
a. firms try to avoid making irreversible decisions about resource depletion. b. investors expect interest rates to fall continuously in the future. c. individuals tend to value their own well-being more highly than the well-being of future generations. d. people do not have what Pigou called a "defective telescopic faculty."