Figure 5.4 shows a firm's marginal cost, average total cost, and average variable cost curves. For an output level greater than Q = 100, the average total cost curve is upward-sloping because:
A. decreasing average fixed cost outweighs increasing average variable cost.
B. diminishing returns are not severe enough to outweigh decreasing average fixed cost.
C. increasing average variable cost outweighs decreasing average fixed cost.
D. marginal cost is increasing.
Answer: C
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An example of a good that is rival in consumption is:
A. a hamburger. B. radio signals broadcast over the air. C. national defense. D. public utilities.
Which of the following central banks does not have an explicit inflation target?
a. The Bank of England b. The Federal Reserve c. Swiss National Bank d. European Central Bank e. The Reserve Bank of India
A regional airline owns 10 aircraft and employs 20 pilots. The airline makes an average of three trips per day with each of its 10 aircraft. The aircraft and their ground crews are idle part of the day. Minimum rest requirements for its pilots mean that if the airline wants to increase its flights, it must hire more pilots. The decision to hire more pilots is:
A. a short-run decision because the number of pilots is being increased; if the number of ground crew were decreased instead, it would be a long-run decision. B. a short-run decision because the number of aircraft is held constant while the labor input is changed. C. a long-run decision because customers will become accustomed to the new flight schedule. D. a long-run decision because hiring pilots will increase revenues over a long period of time for the airline.
People enjoy outdoor holiday lighting displays and would be willing to pay to see these displays but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would
like. This is an example of a: A. negative externality. B. supply-side market failure. C. demand-side market failure. D. government failure.