Which of the following statements is INCORRECT regarding the model for information products?
A) Average total costs slope downward, because average variable cost is constant, average fixed cost slopes downward.
B) The firm maximizes profit by setting the price of its product equal to marginal cost.
C) Marginal cost equals average variable cost.
D) In the long run, accounting profit is positive.
B
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The decision about whether to change prices frequently or infrequently is an application of the:
A. cost-benefit principle. B. scarcity principle. C. principle of comparative advantage. D. principle of increasing opportunity cost.
The long-run supply curve for a constant-cost perfectly competitive industry is
a. a ray from the origin at a 45-degree angle b. perfectly inelastic c. somewhat inelastic d. perfectly elastic e. declining
When Andrew earns no income, his base consumption is $500 . When he earns $3,000 per week, he consumes $2,100 per week and saves the rest. If his weekly income increases by $1,000 . then his total consumption is expected to increase to _____
a. $5,800 b. $3,300 c. $6,900 d. $1,500
Suppose the equilibrium price and quantity of ketchup fall. The most likely explanation for these changes is:
A. an increase in the demand for ketchup. B. a decrease in the supply of ketchup. C. a decrease in the demand for ketchup. D. an increase in the supply of ketchup.