Suppose the price level of a product is gradually declining due to fall in demand. When will a producer of this product decide to shut down in the short run?


A producer operating in this market will decide to stop production and shut down when the market price falls below his average variable cost of production. At this stage, staying in production means losing the fixed costs and not recovering all variable costs, and halting production means losing only the fixed costs.

Economics

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A monopoly is a market model in which just one firm sells a product with no close substitutes

a. True b. False Indicate whether the statement is true or false

Economics

If the demand for textbooks is inelastic, then an increase in the price of textbooks will

a. increase total revenue of textbook sellers. b. decrease total revenue of textbook sellers. c. not change total revenue of textbook sellers. d. There is not enough information to answer this question.

Economics

Mortgage-backed securities are similar to bonds in that the investor who buys one receives

A) federal insurance to cover the value of the security. B) partial ownership of the company that issued the security. C) dividend payments. D) regular interest payments.

Economics

A commitment device is:

A. a way to deal with time inconsistency. B. an arrangement entered into by an individual with the aim of helping fulfill a plan for future behavior that would otherwise be difficult. C. something that helps people conquer their vices. D. All of these are true.

Economics