If the marginal cost curve is above the average total cost curve, then
A. average variable cost is decreasing.
B. average total cost is decreasing.
C. average total cost is increasing.
D. average total cost is constant.
Answer: C
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Researchers find that the income elasticity of poultry demand in Indonesia is 1.2. This implies that if income is expected to grow at 5%, then projected demand for poultry will:
a. Increase by 5% b. Increase by 6% c. Increase by 6.2% d. Increase by 4.2%
Refer to Figure 5-4. Suppose the point labeled B is the “halfway point” on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.99 and $5.01, the price elasticity of demand is
a. less than 1 but greater than zero. b. equal to 1. c. greater than 1. d. equal to zero. e. equal to infinity.
If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q, then the firm will produce at a price of
A. $1,400. B. $1,600. C. $1,700. D. $16.
Economists distinguish a "normal" good from an "inferior" good by focusing on
A) how a change in income effects the demand for that good. B) the good's quality. C) the good's durability. D) the good's desirability. E) all of the above.