Cynthia sells walnut cookies in a perfectly competitive market where the market price is $10 per cookie. Cynthia produces 500 cookies per month with a marginal cost of $5 per cookie, an average variable cost of $3 per cookie, and an average total cost of $7 per cookie. Cynthia is likely to:
a. increase the production of cookies to maximize profit
b. decrease the production of cookies but stay open.
c. continue to maintain current production levels to minimize her losses.
d. shut down immediately to minimize her losses.
a
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When a good is both rivalrous and nonexcludable the:
A. good is likely an artificially scarce good. B. good is likely a private good. C. free rider problem may arise. D. tragedy of the commons may arise.
Exhibit 10-2 Aggregate supply and demand curves
In Exhibit 10-2, the change in equilibrium from E1 to E2 represents:
A. cost-push inflation. B. demand-pull inflation. C. price-push inflation. D. wage-push inflation.
Scarlett developed an economic model to describe the behavior of consumers according to the good price, and their income and tastes. All else equal, her model predicts that an increase in the price of the good may increase or decrease the number of units purchased. What can be said about Scarlett's model?
A) The model's prediction is ambiguous. B) The model's prediction is not ambiguous. C) The model has no assumptions. D) B and C
Recessionary gaps are most likely to be accompanied by
A. inflation. B. inventory reductions. C. unemployment. D. expanding output.