Average cost equals
A. change in total cost/change in quantity.
B. total cost/quantity.
C. total cost ? total variable cost.
D. total cost ? total fixed cost.
Answer: B
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Before the financial crisis of 2008:
A. the 2.5 percent inflation target was seen as a precise target. B. the 2.5 percent inflation target was seen as an upper bound. C. inflation was not seen as a target. D. the 2.5 percent inflation target was seen as a lower bound.
Refer to Figure 8.1, which shows a family of average cost curves. The average fixed cost curve is represented by:
A. Curve 1. B. Curve 2. C. Curve 3. D. the vertical sum of curve 1 and curve 2.
Consider an unregulated monopoly in Figure 13.2. If that monopoly sets its price equal to its marginal cost, it would:
A. earn negative profits. B. earn maximum profits. C. earn zero profits. D. earn small, but greater than zero, profits.
Suppose the economy is operating below potential output. If policy makers try to avoid a budget deficit by raising taxes or reducing government spending, these actions would
A) make a recession worse. B) increase inflation. C) negate the multiplier effect. D) help pull an economy out of a depression.