Consider a firm with the following cost information: ATC = $15, AVC = $12, and MC = $14. If we know that this firm has decided to produce Q = 20 by following the rule to maximize profits or minimize losses, then the price of the output is:
A. $12.
B. $14.
C. $15.
D. $20.
Answer: B
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In reality, AD rarely ________; however, the economy performs as though it does when it ________
A) decreases; fluctuates with potential GDP B) increases; decreases at a pace much slower than potential GDP C) stagnates; increases at a pace much faster than potential GDP D) decreases; increases at a pace much slower than potential GDP E) decreases; increases at a pace much faster than potential GDP
If the demand curve for bottled water shifts rightward and the supply curve of bottled water shifts rightward, the equilibrium
A) price of bottled water definitely increases. B) price of bottled water definitely decreases. C) quantity of bottled water definitely increases. D) quantity of bottled water definitely decreases.
Joe and Rita each have some milk and cookies (Milk on the horizontal axis). Joe's MRS of cookies for milk is 2. Rita's MRS of cookies for milk is 4. Which of the following statements is TRUE?
A) No gains from trade are possible. B) Both Rita and Joe can be made better off if Rita gives Joe some cookies in exchange for milk. C) Rita and Joe are on the contract curve. D) Both Rita and Joe can be made better off if Joe gives Rita some cookies in exchange for milk.
Opportunity cost:
a. represents the best alternative sacrificed for a chosen alternative. b. has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. c. represents the worst alternative sacrificed for a chosen alternative. d. Represents all possible alternatives sacrificed for a chosen alternative.