The production possibilities frontier illustrates
a. the constant rate of technological progress.
b. the fundamental concept of scarcity.
c. the rapid growth of the U.S. economy.
d. that guns always trade for butter.
b
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Assume a perfectly competitive firm sells its output for $150 per unit. At its current 2,000 units of output, marginal cost is $180 and increasing, and average variable cost is $160 . Assuming it wants to maximize its profits, it should: a. increase output
b. decrease output, but not shut down. c. maintain its current output rate. d. shut down.
When firms have an incentive to exit a competitive price-taker market, their exit will
a. lower market price. b. necessarily raise the costs of firms that remain in the market. c. raise profits for firms that remain in the market. d. reduce demand for the product.