Average total cost is important to a business because
A. It always declines as more output is produced.
B. It tells the firm what the profit per unit produced is.
C. It is an indicator of the production function.
D. It tells the firm what its fixed costs are.
Answer: B
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If an economy is producing a level of output that is on its production possibilities curve, the economy
A) has idle resources. B) has idle resources but is using resources efficiently. C) has no idle resources but is using them inefficiently. D) has no idle resources and is using resources efficiently.
A firm that wants to maximize profits should hire each input to the point where
A) its marginal revenue product divided by the price of the input equals one. B) its marginal revenue product divided by its marginal physical product equals the wage. C) its marginal revenue product divided by the product price equals one. D) its marginal physical product divided by the price of the input equals the product price.
With all other inputs held fixed, the marginal product of any input must eventually increase as more of that input is hired. ?
Answer the following statement true (T) or false (F)