For a particular competitive firm, the minimum value of average variable cost (AVC) is $12 and is reached when 200 units of output are produced. For the same firm, the minimum value of average total cost (ATC) is $15 and is reached when 230 units of output are produced. Which of the following statements is correct?
a. In the short run, the firm will shut down if the price of its product is $14.
b. In the long run, the firm will shut down if the price of its product is $11.
c. For this firm, the minimum value of variable cost (VC) is $2,400.
d. If the firm's fixed cost (FC) amounts to $500, then the firm cannot earn a positive profit unless the price of its product exceeds $16.
b
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Commercial society provides incentives to specialize by
A) following one's comparative disadvantage. B) pursuing one's comparative advantage. C) producing somewhere outside the production possibilities frontier. D) producing a narrowly defined good without an interest in the wealth it generates to the producer.
What impact does a decrease in the price level in the United States have on net exports and why?
A) A decrease in the price level reduces net exports because lower prices increase American spending on imports. B) A decrease in the price level increases net exports because lower prices increase the value of the dollar. C) A decrease in the price level reduces net exports because lower prices raise the value of the dollar. D) A decrease in the price level increases net exports by reducing the relative cost of American goods.
The market demand curve is derived by:
a. studying an individual's demand for a product over a year. b. comparing the monthly consumption of a group of people. c. surveying a set of consumers and ascertaining their preferences. d. adding up the quantities that consumers in a market are willing and able to purchase at each price. e. calculating the average price a random sample of consumers are willing to pay for a product.
The invisible hand enforces the tendency toward
A. MR = MU. B. MC = P = MU. C. MC = MPP = P. D. MRP = MPP = P.