Suppose that at the current level of output, price = $100, MC = $100, AVC = $80, and ATC = $90. Which of the following is TRUE?
A) The firm should decrease output.
B) The firm should shut down.
C) The firm should increase output.
D) The firm should maintain the current level of output.
D
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If Bill thinks tacos and turkey sandwiches are perfect substitutes, then his indifference curves for these two goods
A) are L-shaped. B) are negatively sloped and linear. C) are positively sloped and linear. D) have slopes equal to 1.
The government prefers a market-based approach to reduce firms’ emissions of a toxic gas but wants to make certain that no more than 1,000 cubic yards of the gas are ever emitted in a single day. The most efficient policy under these circumstances is likely to be a system of
A. per-unit taxes on emissions of the gas. B. per-unit taxes on the goods produced by firms that emit the gas. C. subsidies to firms that agree not to emit the gas. D. sales of permits to emit specified quantities of the gas on specified days.