When marginal cost is rising, what must happen to average variable cost?
a. It must be falling.
b. It must be rising.
c. It could be rising or falling.
d. It must be constant.
Ans: c. It could be rising or falling.
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The greater the marginal propensity to consume, the
A) flatter the IS curve will be. B) steeper the IS curve will be. C) flatter the LM curve will be. D) steeper the LM curve will be.
Average costs
a. fall at all levels of output b. are falling when marginal costs are below average costs and rising when marginal costs are above average costs c. are falling when marginal costs are above average costs and rising when marginal costs are below average costs d. does not vary with output
The persistent budget deficits of recent decades are
A) an expected result, because politicians have an incentive to levy taxes rather than spend on current programs. B) surprising, because politicians have a strong incentive to balance the government's budget. C) an expected result, because politicians have an incentive to spend on current programs financed by borrowing. D) surprising, because politicians have a strong incentive to run budget surpluses and thereby indicate that their actions have generated a profit.
This spring break you are planning to leave the United States and visit London, where you will stay in a hotel for 10 days. The London hotel will be performing a(n) ________.
A) indirect merchandise export B) merchandise export C) service export D) service import