A profit-maximizing firm in monopolistic competition should shut down in the short run
a. if marginal revenue is less than price
b. if price is always less than average total cost
c. if price is always less than average fixed cost
d. if price is always less than average variable cost
e. under no circumstances
D
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The net loss in welfare from a quota is proportionately larger than for a tariff because: a. it does not result in government revenue
b. the loss in consumer surplus is greater than the gain to producers and the government. c. it prevents nations from fully realizing their competitive advantage. d. it brings about higher prices and revenues to domestic producers.
Jason spends all afternoon baking a cake. When it comes out of the oven, it's burnt and sunk in the middle. Jason thinks about all the time he invested in making it and decides he'll spend more time frosting it and eat it anyway, even though it tastes pretty terrible. Jason's decision to continue to decorate and eat the cake is a good example of:
A. someone focusing on sunk costs. B. someone ignoring sunk costs. C. someone thinking marginally. D. someone weighing the opportunity costs of frosting and eating the cake and the benefits of doing so.