The market price of the product produced by Jones Inc, is $6 per unit, which is higher than the average cost of $4 per unit at the profit maximizing output level. The average variable cost of production is $3.5 per unit. If demand for its product declines due to introduction of cheaper substitutes and the market price of the product falls to $3.8 per unit, which of the following statements will
be true?
a. The firm will close down in the short run.
b. The firm will continue production as long as the market price is above average variable cost.
c. The firm will continue production as long as the market price exceeds fixed cost.
d. The firm will minimize it losses by producing where average variable cost equals $3.8.
B
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If a bank borrows funds for three years, the borrowing will be classified as:
A) demand deposits. B) short-term borrowing. C) stockholders' equity. D) long-term debt.
If your income increases from $30,000 to $40,000 and your savings increases from $2,000 to $4,000 . your marginal propensity to save (MPS) is:
a. 0.2. b. 0.4. c. 0.5. d. 0.8. e. 1.0.
If a family earned $10,000 and, as a consequence, sustained a reduction of $4,000 in government benefits, the family's implicit marginal tax rate would be
a. 10 percent. b. 40 percent. c. 60 percent. d. 75 percent.
Economists generally believe that tax credits and deductions that are used to create an incentive for individuals to go to college
A. cause no more people to go to college, amounting to a special break for people who would have gone to college anyway. B. cause a few more people to go to college, working somewhat as was intended. C. perversely cause fewer people to go to college. D. cause dramatically more people to go to college, working precisely as was intended.