Refer to the information provided in Figure 6.9 below to answer the question(s) that follow. Figure 6.9Refer to Figure 6.9. The marginal utility of the second video game rental is

Which of the following occurs in the factor market?

A) households exchange resources for goods and services. B) firms exchange money for resources. C) firms exchange goods and services for resources. D) households exchange money for goods and services.

The market price of the product produced by Jones Inc, is $6 per unit, which is higher than the average cost of $4 per unit at the profit maximizing output level. The average variable cost of production is $3.5 per unit. If demand for its product declines due to introduction of cheaper substitutes and the market price of the product falls to $3.8 per unit, which of the following statements will

be true? a. The firm will close down in the short run. b. The firm will continue production as long as the market price is above average variable cost. c. The firm will continue production as long as the market price exceeds fixed cost. d. The firm will minimize it losses by producing where average variable cost equals $3.8.