When the average physical product is rising
A. marginal cost is always rising.
B. total cost is falling.
C. average total cost is increasing.
D. average variable cost is falling.
Answer: D
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When economists use the term "correlation," they are referring to
A) normative economics. B) positive economics. C) cause and effect relationships between variables. D) economic policy. E) how two variables move together in a predictable way.
If MRP > MLC, it means that a firm should
A) use less labor. B) use more labor. C) increase its fixed capacity. D) decrease its fixed capacity.
Graphically, how does a monopolistically competitive firm determine its profit-maximizing price?
A) It accepts the price set by the industry-wide forces of supply and demand. B) Graphically, it finds the place where MR = MC and charges the price directly to the left of that point. C) The firm's pricing structure is set by government regulators. D) The firm determines its profit-maximizing output and then charges the price associated with the point on its demand curve directly above that quantity.
When a tax is imposed on the buyers of a good, the demand curve shifts
a. downward by the amount of the tax. b. upward by the amount of the tax. c. downward by less than the amount of the tax. d. upward by more than the amount of the tax.