Suppose you operate a factory that produces gadgets. Your current output is 1,000 gadgets. If your fixed cost is $10,000 and your total cost is $50,000, the:
A. average total cost of production is $500.
B. average variable cost of production is $50.
C. average variable cost of production is $40.
D. marginal cost of production is $40,000.
Answer: C
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Suppose that prices in France increase by 8 percent while prices in the United States remain relatively stable. We would expect that (on the foreign exchange market) the demand for U.S. dollars will __________ and the supply of U.S. dollars will __________
A) increase; decrease B) increase; increase C) decrease; decrease D) decrease; increase
The mutual interdependence that characterizes oligopoly arises because:
A. the products of various firms are homogeneous. B. the products of various firms are differentiated. C. each firm in an oligopoly depends on its own pricing strategy and that of its rivals. D. the demand curves of firms are kinked at the prevailing price.