A firm will shut down temporarily when the price is so low that total revenue is insufficient to cover the
A) total cost of production.
B) total variable cost of production.
C) total fixed cost of production.
D) marginal cost of production.
E) none of the above.
Ans: B) total variable cost of production.
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The income effect is thought to offset the substitution effect among very high wage earners
a. True b. False Indicate whether the statement is true or false
When a market is in equilibrium:
A. there is neither excess demand nor excess supply. B. both excess demand and excess supply are positive. C. both excess demand and excess supply are positive and equal to each other. D. there is either excess demand or excess supply.
The business cycle dating committee determines when peaks and troughs occur by looking at
A. mainly at real GDP figures. B. mainly at the unemployment rate. C. data from our economy and comparing it to data from other major nations. D. mainly at employment, industrial production, personal income, and manufacturing and trade revenue.
Diagram a model of a perfectly competitive market and a separate model of a firm experiencing economic profits. Explain and illustrate on your models the changes that take place in the long run. Be sure to explain why any changes take place.
What will be an ideal response?