A firm is currently producing at the point where MC = MR. The situation for the firm at this point is P = $5, Q = 100, ATC = $6, AVC = $4.50. What do you recommend this firm do?
A) Increase production above the current output rate, because MC = MR at this rate of output.
B) Continue to produce the current output rate, because P > AVC.
C) Shut down, because AVC > P.
D) Shut down, because ATC > P.
Answer: B
You might also like to view...
Social Security was established
a. in the 1930s to provide retirement income to those with a work history b. in the 1930s to provide jobs for the unemployed c. in the 1930s to provide health insurance d. in the 1960s to provide retirement income to those with a work history e. in the 1960s to provide health insurance
The market basket approach:
A. gives us a single number that represents how changing prices affect the typical consumer. B. gives us a list of what the typical consumer buys and the average price change of those goods. C. tells us how the prices of all goods and services in an economy change over time. D. tells us exactly how people change what they buy from year to year.
The self-correcting mechanism to return the economy to potential output from output gaps is the change in:
A. short-run aggregate supply. B. aggregate demand. C. the real interest rate by the central bank. D. potential output.
Andrea Burris lost her job in a company layoff 5 months ago. She would take a job if one was offered, but she has given up looking for work until the economy improves. She is:
A. a member of the civilian labor force who is employed. B. a member of the civilian labor force who is unemployed. C. a member of the civilian labor force who is underemployed. D. a discouraged worker who is not a member of the labor force.