For most firms, average total costs will decrease initially due to decreasing marginal physical product for the inputs used in the production process
Answer the following statement true (T) or false (F)
False
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When real GDP is greater than potential GDP, there is ________ which leads the inflation rate to ________
A) a recessionary gap; rise B) a recessionary gap; remain stable C) an inflationary gap; rise D) a recessionary gap; fall E) an inflationary gap; fall
The M1 measure of the money supply equals
A) currency plus checking account balances plus traveler's checks plus savings account balances. B) currency plus checking account balances plus traveler's checks. C) currency plus checking account balances. D) paper money plus coins in circulation.
The producer price index measures the prices that firms
A) pay for imported natural resources that go into the production process. B) receive for the goods and services they export. C) pay for labor, whether or not the labor is foreign or domestic. D) receive for the goods and services they use at all stages of production.
A firm sets its price at $10.00 per unit. It has an average variable cost of $8.00 and an average fixed cost of $4.00 per unit. In the short run, this firm is a. incurring a loss of $2.00 per unit and should shut down
b. unable to cover all of its fixed cost and hence should shut down. c. incurring a profit. d. incurring a loss per unit of $2.00, but since it can still cover its variable costs, should continue to operate