If your firm is producing a good at a level where marginal revenue equals marginal cost, and price is greater than average total cost, your firm:
A. should shut down and suffer a loss equal to your fixed costs.
B. is earning an economic profit greater than zero.
C. should decrease output.
D. should increase output.
Answer: B
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A chain-weighted index
A) calculates changes in prices by using an average of base years from neighboring years to obtain a more accurate measure of real GDP growth. B) is used to understate the rate of inflation. C) is a useful tool for determining which fence to purchase. D) uses neighboring years' data to calculate changes in nominal GDP.
What important function does adjudication perform in the process of reducing negative externalities?
A) It allocates the revenue from negative externalities to the people who have been damaged. B) It arbitrates between beneficiaries of negative externalities and the people who must bear their costs. C) It decides whether punitive or merely compensatory damages will be awarded. D) It discovers who has which rights. E) It imposes criminal penalties on the people responsible for generating negative externalities.