Which of the following is true regarding the cost curves faced by a firm?
a. when MC > ATC, AVC must be falling
b. when MC > AVC, ATC must be rising
c. when MC > ATC, ATC must be rising
d. MC and ATC are the same for a perfectly competitive firm
e. when MC is a horizontal line, price is constant
C
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If government expenditure on goods and services increase by $10 billion, then aggregate demand
A) increases by $10 billion. B) increases by $10 billion multiplied by the government expenditure multiplier. C) decreases by $10 billion multiplied by the government expenditure multiplier. D) decreases by $10 billion. E) increases by $10 billion multiplied by the tax multiplier.
In the long run, a monopolistic competitor will
a. always produce at minimum efficient scale b. produce too little output to achieve minimum cost per unit c. use limit pricing to forestall competition d. earn economic profits e. standardize its product