Which of the following statements about economic models is TRUE?
A) A good economic model is complex.
B) A good model does not rely on any assumptions.
C) Every model is based on a set of assumptions.
D) Economic models are designed to explain what people need.
C
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When aggregate planned expenditure is less than GDP,
A) the economy definitely is at its equilibrium expenditure but even so, firms decrease production. B) firms increase production until the economy reaches equilibrium expenditure. C) the economy definitely is at its equilibrium expenditure and firms do not change production. D) firms decrease production until the economy reaches equilibrium expenditure. E) the economy might be at its equilibrium expenditure and if it is, firms do not change their production.
The price that represents the shutdown point for a perfectly competitive firm is the
a. highest point on the marginal cost curve b. lowest point on the marginal cost curve c. highest point on the average variable cost curve d. lowest point on the average variable cost curve e. lowest point on the average total cost curve