Marginal cost
A. is the average cost of production divided by output.
B. equals the increase in AVC resulting from producing one more unit.
C. always equals average cost.
D. is the increase in total cost resulting from producing one more unit.
Answer: D
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Suppose the market demand curve (D) in an oligopoly market characterized by a dominant firm and a fringe is given by Q = 25 - 2P. The fringe supply curve is given by QF = -1 + 0.3P. If the marginal cost of production for the dominant is $3, calculate the market price and total output produced by the dominant firm and the fringe
a. Q = 14.42 units and P = $8.64 b. Q = 10.69 units and P = $7.15 c. Q = 12.69 units and P = $6.5 d. Q = 8.74 units and P = $5.15
When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is
a. downward sloping. b. upward sloping. c. horizontal. d. vertical.
If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation:
A. a deflationary spiral is likely to occur. B. an inflationary spiral is likely to occur. C. stagflation is likely to occur. D. the Phillips Curve is likely to shift inward.