What is the lowest price at which a firm produces an output? Explain why
What will be an ideal response?
The lowest price at which a firm will produce output is the price that equals the firm's minimum AVC. At this price the firm has just enough total revenue to cover its total variable costs. The firm's loss is equal to its fixed costs. At any lower market price the firm's loss would be greater than its fixed costs. In this case the firm can avoid losses that are greater than its fixed cost by shutting down.
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Increases in ________ typically lead to decreases in ________
A) the interest rate; saving B) disposable income; consumption C) autonomous consumption; consumption D) all of the above E) none of the above
Here's what we know about last year's weekly demand for 2-night DVD rentals in the Village of Harmony: When P = $3, Qd = 100; at P = $5, Qd = 75; and when P = $7, Qd = 50. This year the village population has increased by 25%
What impact is this most likely to have? A) Each individual's demand for DVD rentals will increase. B) Each individual's demand curve for DVD rentals will shift to the left. C) The market demand curve for DVD rentals shifts left. D) The market demand for DVD rentals increases.
Suppose demand decreases and supply decreases. Which of the following will happen?
a. equilibrium price will increase b. equilibrium price will decrease c. equilibrium quantity will increase d. equilibrium quantity will decrease e. neither the equilibrium price nor the quantity will change
Education confers positive externalities because
a. some education is done outside the market (i.e., in public schools) b. curricula are regulated by the government, even in private schools c. an educated person consuming education gains many benefits he or she did not expect when the process started d. an educated person who has consumed education usually behaves in a way that benefits others e. education gives benefits to individuals in excess of the costs they pay to get it