If a firm's marginal cost is greater than its average total cost, its average total cost is
A. increasing.
B. decreasing.
C. not U-shaped.
D. constant.
Answer: A
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Which of the following is a difference between the theories of John Maynard Keynes and the classical economists?
a. Unlike Keynesian economists, classical economists believed that unemployment was a serious long-term problem. b. Unlike Keynesian economists, classical economists advocated that the economy was always in equilibrium. c. Unlike Keynesian economists, classical economists believed that the economy would always settle at full employment. d. Unlike Keynesian economists, classical economists did not believe that the economy was always in equilibrium. e. Unlike Keynesian economists, classical economists believed a glut created an unemployment problem for the economy.
When a good commodity is driven out of the market by a bad commodity, the result is called:
a. moral hazard. b. adverse selection. c. positive externality. d. negative externality. e. the commons problem.
The Coase Theorem suggests that negotiations to eliminate an externality allow the resource to
A. stop causing the externality altogether. B. move to the person who values it the most. C. move to the person who needs it the most. D. continue to benefit everyone.
Which of the following best describes the capture theory of regulation?
i. Regulation seeks an efficient use of resources. ii. Regulation is aimed at keeping prices as low as possible. iii. Regulation helps firms maximize economic profit. A) i only B) ii only C) iii only D) i and ii E) i, ii, and iii