If marginal cost of growing wheat, MC, just reaches $4 per bushel and if the expected price of wheat Pis $4, a farmer
A. should produce at that exact level at which MC= P and if AVC< MC.
B. should check her/his average variable cost to see if P covers AVC.
C. should stop producing if AVC> 4.
D. All of the above.
Ans: D. All of the above.
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Nonactivists of policies contend that a policy of shifting the aggregate ________ curve will be costly because it produces ________ volatility in both the price level and output
A) supply; less B) supply; more C) demand; less D) demand; more
What is the aggregate demand curve and what does it represent?
What will be an ideal response?
If the price of an input falls, a firm would increase the use of that input for two reasons:
a. the input is now more productive, and the firm can substitute this input for other relatively more expensive inputs. b. the input is now more productive, and overall production costs are now lower, meaning a firm may choose to increase production. c. overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs. d. overall production costs are now lower and the firm will have more of other inputs to use with the one in question.
When the economy slows down:
A. firms contract their operations. B. demand for workers decreases. C. GDP growth is slowing or negative. D. All of these are true.