If some inputs of production do not vary with the level of output we call them fixed inputs which when multiplied by their price become fixed cost. Which of the following items typically fit this category?
A. Insurance payments
B. Interest on loans
C. Property taxes
D. All of these are fixed costs
Answer: D
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Sugar and honey are viewed as substitutes for each other in many cooking applications. If the price of sugar rises, we would expect the:
a. demand for honey to increase. b. demand for honey to decrease. c. quantity demanded of honey to decrease. d. price of honey to decrease. e. quantity demanded of honey to increase.
T-Shirt Enterprises is selling in a purely competitive market. Its output is 300 units, which sell for $1 each. At this level of output, marginal cost is $1 and average variable cost is $1.50. The firm should:
A. decrease output to 250 units. B. increase output to 350 units. C. produce zero units of output. D. continue to produce 300 units.
For an economy to increase investment, it must:
A. increase saving. B. increase present consumption. C. buy more stocks and bonds. D. increase nominal GDP.
The marginal revenue product of an economic resource for a firm operating in purely competitive product and resource markets:
A. Is the marginal product of the resource divided by the price of the final product B. Is the increase in total revenue resulting from the addition of one more unit of the resource C. Is equal to the average revenue product at the lowest point of the average revenue product curve D. Decreases as the quantity of output decreases