If price is above average variable cost and below average total cost, a profit-maximizing price taker should
a. immediately shut down; failing to do so is contrary to the idea of profit maximization in a competitive market.
b. continue producing as long as it expects the market price to rise above average total cost in the near future.
c. attempt to push price upward by slowly reducing output.
d. cut price so more units can be sold.
B
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Government purchases are defined as
A) only goods purchased by federal, state, or local governments. B) all goods and services purchased by the federal government. C) all goods and services purchased by the federal or state government. D) all goods and services purchased by the federal, state, or local government. E) goods and services purchased from the government.
When a tax is placed on the buyers of tennis racquets, the size of the tennis racquet market
a. and the price paid by buyers both decrease. b. decreases, but the price paid by buyers increases. c. increases, but the price paid by buyers decreases. d. and the price paid by buyers both increase.