Other things equal, if the price of a key resource used to produce product X falls, the:
A. product supply curve of X will shift to the right.
B. product demand curve of X will shift to the right.
C. product supply curve of X will shift to the left.
D. product supply curve of X will not shift.
Answer: A
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A firm has market power:
A. when it can profitably charge any price of its choosing. B. when it is characterized as a price taker. C. when it can profitably charge a price that is above its marginal cost. D. only when it is the sole firm producing in a market.
In the case study in the text involving calculator production, the fact that each calculator produced added $10.30 to cost and $12 to revenue made clear the value of ____ in determining whether or not to suspend production.
A. average fixed cost B. cost saving C. marginal analysis D. the level of fixed cost