Describe the relationship between average variable cost and average total cost. How are the general shapes of the AVC and ATC curves related?
ATC = AVC + AFC, so the vertical distance between the AVC and ATC curves is the value of AFC for that level of output. Both AVC and ATC are typically U-shaped. The vertical distance between the two curves, however, is steadily declining as output increases because AFC is steadily declining.
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Suppose the government increases lump-sum taxes. This causes
A) consumption spending to decrease and spending on imports to increase. The effect on aggregate demand depends on whether domestic spending or spending on imports decreased the most. B) disposable income to decrease, which causes consumption spending to decrease and aggregate demand to decrease. C) government spending to decrease, which causes aggregate demand to decrease. D) disposable income to decrease, which causes aggregate supply to decrease.
Consumers don't always have to pay the maximum price they are willing to pay
Indicate whether the statement is true or false
Suppose you have a choice of working full-time during the summer or going full-time to summer school. Summer tuition and books are $2,200 . If you worked, you could make $7,000 . Your rent is $1,000 for the summer, regardless of your choice. The opportunity cost of going to summer school is, therefore,
a. $2,200 b. $7,000 c. $8,000 d. $9,200 e. $10,200
Which of the following categories accounted for the lowest percent of the total federal government expenditures in recent years?
a. Income security. b. National defense. c. Education and health. d. Interest on the national debt.