The average cost of production at the profit maximizing output level for Jones Inc, is $4 per unit. The average variable cost of production is $3.5 per unit at this output level. The introduction of cheaper substitutes reduces the demand drastically and the market price falls to $1.5 per unit. If the minimum average variable cost the firm must incur is $2.5, identify the correct statement from
the following.
a. There are output levels where revenue exceeds variable cost when the price is $1.5 per unit.
b. The firm will continue to operate in the short run.
c. The firm will breakeven at the price of $1.5 per unit.
d. The firm will shut down.
D
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Which of the following statements correctly indicates a property of good economic questions?
A) A good economic question addresses topics that are important to economic agents and/or to the society. B) A good economic question must always include arithmetic calculations and graphical solutions. C) A good economic question should always be positive and not normative. D) A good economic question should always be easy to answer.
In the above figure, when the economy is in a long-run equilibrium, the price level will be
A) 90. B) 100. C) 110. D) 120.
The goal of the minimum wage is to ensure workers a minimally adequate standard of living
a. True b. False Indicate whether the statement is true or false
According to the Hotelling Rule, the price of an exhaustible natural resource will
a) be very volatile b) rise at the rate of interest c) be too low and result in to being exploited too quickly d) rise to ensure that the resource never runs out. e) Always be at the backstop price where rival sources are economic