The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?
What will be an ideal response?
The wheat farmer shuts down if the price is less than the minimum average variable cost. So in the figure, the wheat farmer shuts down if the price is less than $2 per bushel.
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Natural monopolies are firms that
a. have a downward-sloping long-run average cost curve over the entire range of market demand b. have an upward-sloping long-run average cost curve over the entire range of market demand c. are protected against the entry of new firms by patents, licenses, or other legal restrictions d. control a nonreproducible resource that is critical to production e. have been created over time by the mergers of many smaller firms
When people make choices they typically know with certainty which choice is best
a. True b. False Indicate whether the statement is true or false