Which of the following statements best describes the relationship between marginal costs and the average variable cost (AVC) curve?
a. The marginal cost curve is below the AVC curve by a fixed amount.
b. Marginal costs are equal to average variable costs at the lowest point on the AVC curve.
c. Marginal costs are equal to or below the average variable costs at very high output.
d. The marginal cost curve is higher than the average variable cost curve regardless of output.
b. Marginal costs are equal to average variable costs at the lowest point on the AVC curve.
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If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then, according to the midpoint formula, the value of price elasticity of demand for Pepsi-Cola is
a. -0.5 b. -0.25 c. -1 d. -3 e. -2
A good that takes up a very large percentage of the consumer's budget will tend to have
a. an elastic demand b. a perfectly elastic demand c. an inelastic demand d. an upward-sloping demand curve e. very many substitutes
An increase in total planned real expenditures that is caused by a factor other than the price level will lead to the
A. aggregate supply curve shifting to the right. B. aggregate supply curve shifting to the left. C. aggregate demand curve shifting to the left. D. aggregate demand curve shifting to the right.
If income changes, one would expect
A. the demand for a product to change. B. the supply of a product to change. C. both the demand for and the supply of a product to change. D. to move from one point to another along the demand curve for the product.