The price-taker firm should discontinue production immediately if:
A. the market price exceeds the firm's average total costs.
B. the market price is less than the firm's average variable costs.
C. the market price is less than the firm's average total costs, but greater than its average variable cost.
D. its accounting statement indicates that it is suffering losses.
Answer: B
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The concept of diminishing marginal utility is embedded in the utilitarian rationale for
a. trickle-down effects. b. enhancing market efficiency. c. redistributing income. d. maintaining the status quo income distribution.
You sell cupcakes. One day you double the time you spend and double all your inputs, and make twice as many cupcakes. Your cupcake production function has
a. decreasing returns to scale. b. zero returns to scale. c. constant returns to scale. d. increasing returns to scale.