As a firm increases the level of output that it produces, short-run average fixed cost
A. rises and then falls.
B. decreases.
C. decreases up to a particular level of output and then increases.
D. remains constant since fixed costs are constant.
Answer: B
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Explain the law of demand. What does it imply about the shape of the demand curve?
What will be an ideal response?
If the market for bottled spring water is characterized by a very elastic supply curve and a very inelastic demand curve, an outward shift in the supply curve would be reflected primarily in the form of:
a. higher prices. b. higher output. c. lower prices. d. lower output.
Which of the following statements is true of a monopolist?
a. The firm charges the highest possible price. b. The firm always earns a profit. c. The firm might earn a profit in the long run. d. The firm generates a larger consumer surplus than a perfectly competitive firm. e. The firm is more production efficient than a perfectly competitive firm.
Which department in a modern university would most likely advertise itself as a promoter of modern growth theory?
a. computer science b. accounting c. economics d. history