The cookie company in the mall hires workers to produce cookies. The workers are paid $75 per day, and the cost of renting the space in the mall is $250 per day. If two workers are hired, the variable costs are
a. $75
b. $100
c. $150
d. $200
c. $150
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If monopolistically competitive firms earn short-run economic profits, we expect to see
A) new firms enter the industry, which shifts the demand curves of the existing firms to the left until firms earn zero economic profits. B) new firms trying to enter the industry, but unable to do so because of barriers to entry. C) existing firms altering their scale of plant to try to capture larger profits. The combined effect is to cause all firms to earn zero economic profits. D) existing firms increasing prices to try to capture larger economic profits.
The profit-maximizing monopolist will never operate in a price range over which
A) the demand curve slopes downward. B) demand is inelastic. C) P > MR. D) P > MC.
Starting from long-run equilibrium, a large tax cut will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; higher B. expansionary; higher; potential C. recessionary; higher; potential D. recessionary; lower; lower
The formula for total fixed cost is
A. TFC = TVC -TC. B. TFC = TC + TVC. C. TFC = TC -TVC. D. TFC = TC/TVC.