Explain how the fixed cost curve affects the relationship between the total cost curve and the variable cost curve.
What will be an ideal response?
The total cost curve is a summation of the variable and fixed cost curves. The fixed cost curve is a straight line, because it does not change based on quantity of output. Therefore, the total cost curve will always be above the variable cost curve by a fixed amount.
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The table above gives costs at Jan's Bike Sho
A) $200 B) $300 C) $400 D) $500 E) None of the above answers is correct.
Suppose the market demand curve for a Bertrand duopoly is downward sloping. What happens to the Nash equilibrium price and market quantity if the constant marginal cost declines?
A) Price and quantity decline B) Price increases and quantity declines C) Price decreases and quantity increases D) Price and quantity increase
How do price controls undermine the market as a communication device?
Which of the following is a valid concern about the national debt for a country whose debt is held entirely by its citizens?
a. The welfare of future generations will be directly related to the per-capita size of the national debt that they inherit. b. Growth of the national debt will eventually lead to the bankruptcy of the government. c. When the debt comes due, future generations may be unable to pay it off. d. If the increases in the national debt reduce private expenditures on capital formation, future generations may have lower incomes because they will inherit a smaller stock of capital.