A firm sells 1000 units per week. It charges $15 per unit, the average variable costs are $10, and the average costs are $25 . In the long run, the firm should
a. Shut-down as the firm is making a loss of $10,000 per week
b. Shut-down as price is lower than average cost
c. Continue operating as the firm is covering all the variable costs and some of the fixed costs
d. Shut-down because it is cost effective to pay off the remaining fixed costs
b
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If policy makers wanted to use both monetary and fiscal policy to stimulate demand and reduce a high rate of unemployment, which of the following would be most appropriate?
a. A larger budget deficit and the purchase of securities in the open market by the Fed b. A government surplus and the sale of securities in the open market by the Fed c. A larger government deficit and an increase in the discount rate d. A larger government surplus and a reduction in the discount rate
Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. What are Wanda's explicit costs per glass?
a. $0.18 b. $0.10 c. $0.08 d. $0.02
Which of the following statements is inaccurate?
A. Ideally, the market mechanism will lead an economy to the optimal mix of output. B. Voters are quick to blame government meddling for many economic woes. C. There is substantial agreement about how and when markets fail. D. There is substantial agreement about whether government improves market outcomes.
A political problem with discretionary fiscal policy is the
A. business cycle. B. split control of the legislative and judicial branches of government. C. Federal Reserve. D. political business cycle.