If individual firms face a horizontal demand curve at a given market price:
A. price is equal to average total cost.
B. price is equal to marginal cost.
C. price is equal to marginal revenue.
D. price is equal to average variable cost.
Answer: C
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Assume that production from a automobile manufacturer caused acid rain. If the government imposed a tax on the manufacturer equal to the cost of the acid rain, the government's action would
A) externalize the externality. B) eliminate all acid rain. C) force the manufacturer to move production to another location. D) internalize the externality.
Which of the following is true with regard to the supply of money?
A) an open market sale of government securities will increase liquidity B) an open market purchase of government securities will decrease liquidity C) liquidity and the money supply are directly related D) all of the above E) none of the above
Residential construction (new houses and apartments) are included in which component of GDP?
A. Government purchases B. Retail spending C. Investment spending D. Net exports
Which one of the following is a major difference between market and collective action through government?
a. Individuals are motivated by personal interests when making market choices, but they will be motivated primarily by the public interest when making collective choices. b. Competitive behavior is present when decisions are made in the marketplace, but competition is absent when choices are made collectively. c. Scarcity constrains output when decisions are made in the market sector, but scarcity is absent when goods are provided by the government. d. In the market sector, there is generally a one-to-one link between payment and consumption; this link is often absent in the government sector.