If income increases we know for sure that the:
a. demand curve will shift to the right
b. demand curve will shift to the left
c. demand curve will stay the same since only price affects it
d. supply curve will shift to the right
e. none of the above
Ans: a. demand curve will shift to the right
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A firm may express increasing, constant and decreasing returns to scale for various levels of output
Indicate whether the statement is true or false
A firm enjoys a positive economic profit when:
a. the demand curve touches the average cost curve at the profit-maximizing level of output. b. the marginal revenue curve has a negative intercept on the ordinate axis. c. the average revenue curve lies below the average cost curve at the profit-maximizing level of output. d. the marginal cost is declining at the profit-maximizing level of output. e. the average revenue curve lies above the average cost curve at the profit-maximizing level of output.