If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal
A) zero.
B) the rate of output where price equals marginal cost.
C) the rate of output associated with the break-even point.
D) the rate of output where marginal revenue equals average fixed costs.
Answer: A
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Consider two individuals, Nigel and Mia, who produce hair pins and bandanas. Nigel's and Mia's hourly productivity are shown in Table 3.3. Mia's opportunity cost of producing one hair pin is
A) 1/3 of a bandana. B) 2.5 bandanas. C) 3 bandanas. D) 10 bandanas.
Combinations of goods outside the production possibilities curve
a. are unattainable given society's technology and resources b. are combinations that have already been consumed c. go beyond basic necessities d. result from involuntary unemployment e. are the result of economic recessions