Explain why the marginal cost curve intersects average total cost at the point of minimum average total cost.
What will be an ideal response?
Suppose that marginal cost is below average total cost. This will have the effect of dragging down the average (think about what happens to your 3.5 grade point average if you get a D in economics!). Now suppose that the marginal cost is above the average total cost. This will lead to the average total cost increasing. So average total cost is at a minimum when the marginal cost exactly equals the average total cost.
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When the dollar depreciates against the euro, which of the following is unlikely to happen?
A) German consumers will buy more U.S. products B) U.S consumers will find German goods to be more expensive C) German firms that export to the U.S. market will have a higher profit D) Americans will not travel to the euro areas as much for vacations
As interest rates rise, the opportunity cost of holding money ________ and the demand for money ________
A) rises; rises B) rises; falls C) falls; rises D) falls; falls