When price exceeds average variable cost but not average total cost, the firm should, in the short run,
A. Minimize per-unit losses by producing at the rate of output where ATC is minimized in the short run.
B. Shut down.
C. Produce at the rate of output where MR = MC.
D. Minimize total losses by producing at the rate of output where ATC is minimized.
Answer: C
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Average cost is the cost of producing the next unit.
Answer the following statement true (T) or false (F)
The change in total revenue that results from a one-unit change in the amount of a variable resource used is
a. average resource cost b. marginal resource cost c. marginal product d. marginal revenue product e. average revenue product
If U.S. prices increase relative to the rest of the world, we would expect:
A. net exports to increase. B. net exports to decrease. C. net exports to be unaffected. D. government spending to increase.
Expansionary gaps create what type of shortage?
a. money b. demand c. labor d. no shortages are created in expansionary gaps