Which cost always increases as output increases?
A) total cost
B) marginal cost
C) average total cost
D) average fixed cost
A
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A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?
What will be an ideal response?
You can manufacture a product in the US and transfer it to Europe. If the marginal cost (MC) is $3 per unit, and the market price in Europe is $5 per unit, should the product be manufactured?
A. No, because the net receipt of $5 is larger than the MC in the US. B. No, because the net receipt of $3 is the same as the MC in the US. C. Yes, because the gross receipt of $3 is larger than the MC in the US. D. Yes, because the net receipts in Europe will exceed the MC in the US.