You are hired by Jimbo's Potato Farm to determine when Jimbo should shut down and produce no potatoes in the short run. Jimbo sells his potatoes in a perfectly competitive market. You tell Jimbo to shut down if:
A. total cost is less than total revenue when marginal revenue equals marginal cost.
B. price is less than average variable cost when marginal revenue equals marginal cost.
C. price is less than average total cost when marginal revenue equals marginal cost.
D. marginal revenue is less than marginal cost.
Answer: B
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All else equal, if oil prices decrease, annual oil consumption will ________ and the years it will take to deplete the stock of oil will most likely ________
A) decrease; increase. B) decrease; decrease C) increase; increase D) increase; decrease
Refer to Figure 24-1. Ceteris paribus, an increase in interest rates would be represented by a movement from
A) AD1 to AD2. B) AD2 to AD1. C) point A to point B. D) point B to point A.
Your company discovers a better way to produce mousetraps, but your better methods are not apparent from the mousetraps themselves. Your knowledge of how to more efficiently produce mousetraps is
a. common technological knowledge. b. common, but not technological, knowledge. c. proprietary technological knowledge. d. proprietary, but not technological, knowledge.
A firm with market power faces the following estimated demand and average variable cost functions:Qd = 39,000 - 500P + 0.4M - 8,000PRAVC = 30 - 0.005Q + 0.0000005Q2where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. The firm should ________ because ________.
A. operate, P = $60.50 > AVC = $25.50 B. operate, P = $62 > AVC = $22 C. shut down, P = $62 < TVC = $229.50 D. operate, P = $62 > AVC = $17.50