A firm is producing 1,000 units of output for which the average variable cost of production equals 50 cents. The firm's total fixed costs equal $700 . The total cost of producing 1,000 units of output equals:
a. $700
b. $500.
c. $1,000.
d. $1,200.
d
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If quantity demanded for sneakers falls by 6 percent when price increases 20 percent, we know that the absolute value of the own price elasticity of sneakers is:
A. 2.3. B. 0.3. C. 0.7. D. 3.3.
According to the classical model
A. unemployment only exists during periods of war. B. the natural rate of unemployment is zero. C. long-term unemployment is unavoidable. D. unemployment is a temporary phenomenon.
When a Clarke tax is used to finance a public good, each person's tax equals
a. the amount that he is willing to pay for the good. b. the difference between the value he places on the public good and its cost. c. the cost of the public good minus the value that other people claim to receive from it. d. everyone else's tax, with the sum equaling the cost of producing the public good.
Points that lie below the production possibilities curve are inefficient because:
A. producing more of one good means producing less of the other. B. more of one good could be produced without producing less of the other. C. producers face scarcity. D. too many goods are being produced.