Suppose that at the current level of output, price = $12, MC = $14, AVC = $7, and ATC = $9. Which of the following is TRUE?
A) The firm should decrease output.
B) The firm should shut down.
C) The firm should increase output.
D) The firm should maintain the current level of output.
Answer: A
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Suppose you purchase a call option with a strike price of $85 for an options price of $10 How much profit will you earn if you exercise it when the price is $100?
What will be an ideal response?
If the price of a substitute increases, which of the following is most likely to happen in the market for the product under consideration in the short run?
A) Supply will increase. B) Firms will leave the market. C) Firms will devote more variable inputs in the production of this good. D) Firms will devote less variable inputs in the production of this good.
The long-run average cost curve is tangent to the minimum point of every short-run average total cost curve
a. True b. False
High prices do not occur in laissez-faire markets
a. True b. False Indicate whether the statement is true or false