What does average total cost equal?
a. change in total costs divided by quantity produced
b. change in total costs divided by change in quantity produced
c. (fixed costs plus variable costs) divided by change in quantity produced
d. (fixed costs plus variable costs) divided by quantity produced
Ans: d. (fixed costs plus variable costs) divided by quantity produced
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Refer to the scenario above. If Rebecca wins the auction, she will earn a surplus of ________
A) $1,000 B) $4,500 C) $5,000 D) $45,000
The government of your state wants Gigantic Software Corp, which is a natural monopoly, to stay in business yet still produce where price equals marginal cost. The government might choose to
a. set a price ceiling 10 percent lower than its previous level b. impose a tax on the company for each dollar of sales c. establish regulations that raise the company's cost of doing business d. provide a subsidy to the company to cover the loss and ensure a normal profit e. replace the company's top management