How is average total cost calculated? If the total cost of producing 190 units of output is $355, what is the average total cost?
What will be an ideal response?
Average total cost is calculated by taking total cost and dividing by the number of units of output. Therefore, the average total cost is $355/190 = $1.87 .
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Suppose business decision makers become more optimistic about the future and, as a result, increase their investment spending by $20 billion. If the economy's marginal propensity to consume is 0.75, the equilibrium level of aggregate real GDP will increase by:
a. $15 billion. b. $20 billion. c. $50 billion. d. $80 billion.
In response to the financial crisis that began in 2007, the government began to bail out banks deemed "too big to fail." Critics of this action argued that this would create the prospect of future bailouts and encourage banks to be fiscally irresponsible
in the future. This illustrates: A. the adverse selection problem. B. the moral hazard problem. C. the principal-agent problem. D. logrolling.