If, at the output where marginal revenue equals marginal cost, price is below average variable cost, a firm will shut down in the short run.
Answer the following statement true (T) or false (F)
True
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Which of the following is true about average fixed cost?
a. Average fixed cost has a U-shape, and marginal cost crosses average fixed cost at its minimum point. b. Average fixed cost does not vary as output increases. c. Average fixed cost is the difference between marginal cost and average total cost. d. Average fixed cost is total fixed cost divided by the quantity of output produced, and it declines steadily as output increases.
Which of the following statements is correct, when the exchange rate changes from €2/$ to €1.5/$?
a. Both the euro and the dollar depreciate. b. The euro (€) depreciates. c. The euro depreciates and the dollar appreciates. d. The euro appreciates and the dollar depreciates. e. None of the above.
The market demand curve for a given good shifts when there is a change in any of the following factors EXCEPT
A. the level of consumers' income. B. the price of the good. C. the tastes of consumers. D. the prices of goods related in consumption.
Any imperfection in the market mechanism that prevents optimal outcomes is known as
A. Market failure. B. Government failure. C. Public cost. D. External cost.