What is the shut-down rule for any firm?
Any firm should shut down if losses are greater than total fixed costs (or when price is less than average variable cost; or when total revenue is less than total variable cost) in order to minimize losses in the short run.
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Which of the following is an example of a sunk cost?
A) The cost incurred in painting a new office space B) The wage paid to workers in a mill C) The cost of raw materials used in a factory D) The cost of electricity used in the office
The U.S. economic data for the last 50 years indicates that
A) there is an inverse relationship between unemployment rate and inflation rate. B) there is a direct relationship between unemployment rate and inflation rate. C) during recessions the unemployment rate was always twice as high as the inflation rate. D) there has been no long-run relationship between unemployment and inflation rates.