Suppose the minimum average total cost (ATC) of a firm competing in a competitive price-taker market was $1.00 per unit and that the firm's minimum average variable cost (AVC) was $.80 per unit. If the market price was $.75 per unit, a profit-seeking firm would
a. shut down immediately.
b. produce where MR = MC in the short run.
c. shut down in the long run but remain in business in the short run.
d. do both b and c.
A
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What is the dumping argument for protection from international trade?
A) Domestic firms must be protected until they gain a comparative advantage. B) Any firm necessary in wartime must be protected. C) Foreign producers selling below cost to drive domestic firms bankrupt must be stopped. D) Domestic jobs must be protected from competition from low-paid foreign workers. E) Foreigners selling products in the economy limit the nation's diversity and stability.
If a firm is experiencing diminishing marginal returns, its marginal product is negative
a. True b. False
If the demand curve for X has twice the elasticity of the demand curve for Y, then for the same percentage decrease in price, the percentage increase in the quantity of X demanded would be twice that for Y
a. True b. False Indicate whether the statement is true or false
Comparing monetary and fiscal policy:
A. monetary policy is easier to implement. B. history has shown fiscal policy to be more effective at stabilization. C. fiscal policy has an advantage because it is faster to implement than monetary policy. D. fiscal policy is easier to implement.