Production possibilities curve are usually bowed outward. This is because
a. the more resources a society uses to produce one good, the fewer resources it has available to produce another good.
b. it reflects the fact that the opportunity cost of producing a good decreases as more and more of that good is produced.
c. of the effects of technological change.
d. resources are specialized, that is, some are better at producing particular goods rather than other goods.
D
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Mrs. Smith operates a business in a competitive market. The current market price is $7.50 . At her profit-maximizing level of production, the average variable cost is $8.00, and the average total cost is $8.25 . Mrs. Smith should
a. shut down her business in the short run but continue to operate in the long run. b. continue to operate in the short run but shut down in the long run. c. continue to operate in both the short run and long run. d. shut down in both the short run and long run.
A monopolist’s cost curves will
A. be identical to those of a competitive firm. B. be higher than a competitive firm’s cost curves. C. be peculiar to the individual producer since there is only one. D. drop more steeply as output increases.