If a firm operating in a competitive industry shuts down in the short run, it can avoid paying
a. fixed costs.
b. variable costs.
c. total costs.
d. The firm must pay all its costs, even if it shuts down.
b
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If the government decides to spend an extra $5 billion on fighter jets that they would otherwise have spent on road construction, and the MPC = 0.75, what is the effect on AD? a. It has no effect
b. It increases by $5 billion. c. It increases by $15 billion. d. It increases by $20 billion.
Joe is shopping for a new computer. A computer can be delivered to Joe's home for $1,200. Alternatively, Joe can pick up the same computer at the warehouse for $1,000. How should Joe buy the computer?
A. Joe should drive to the warehouse if his cost of driving to the warehouse is greater than $200. B. Joe should drive to the warehouse because the $200 he would save by driving to the warehouse is more than 10% of the purchase price. C. Joe should drive to the warehouse if his cost of driving to the warehouse is less than $200. D. Joe should drive to the warehouse because $1,000 is less than $1,200.
Output (Bushels of Barley)Marginal Cost(Dollars)10 bushels$0.3020 bushels$0.6030 bushels$0.9040 bushels$1.20 Refer to Table 5.1, which gives Farmer McColl's marginal cost function for barley. If Farmer McColl is currently producing 25 bushels of barley, which of the following could be the market price for a bushel of barley?
A. $18.75. B. $0.75. C. $1.88. D. $7.50.
For inferior goods, demand will fall when
A. price increases. B. price decreases. C. income decreases. D. income increases.