In the short run, a competitive firm will
a. Will produce a quantity where AC = MR.
b. Will produce a quantity where AVC = MR.
c. Will produce a quantity where MC = MR.
d. Will shut down if price falls below the minimum of average costs.
c. Will produce a quantity where MC = MR.
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If the substitution effect is stronger than the income effect, a decrease in real interest rates will ________ current consumption for households who are lenders and will ________ current consumption for households who are borrowers
A) increase; decrease B) decrease; increase C) increase; increase D) increase; have an unclear effect on
In order to get children to eat all the food they've served, regardless of their hunger, mothers have relied for decades on the argument that "there are starving children in Africa." Assuming the presence of hungry children on another continent does not affect the utility you derive from the food on your plate, if you choose to force down food based on this argument, you are:
A. acting rationally. B. caring more about starving children than your own well-being. C. acting irrationally. D. doing your part in the fight against world hunger.
An economic model will produce poor predictions if it includes unrealistic assumptions
a. True b. False
If there is a temporary increase in the money supply in the Eurozone, ceteris paribus, what is the result for the United States?
a. The money supply in the United States must decrease by the same proportion. b. The U.S. dollar nominal interest rate will increase, as the euro rate is unchanged. c. Long-run expectations shift to expect a stronger euro. d. The dollar appreciates against the euro.