The ATC curve for a firm that produces an information product
A) slopes downward, because AVC is constant, AFC slopes downward, and ATC = AVC + AFC.
B) slopes upward, because AFC is constant, AVC slopes upward, and ATC = AFC + AVC.
C) is U-shaped, because AVC is U-shaped, AFC slopes downward, and ATC = AVC + AFC.
D) slopes downward, because MC slopes downward, AVC is constant, and ATC = AVC +MC.
Answer: A
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The cost to a physician of tending a patient is
A) dependent on the number of years over which the physician practices. B) higher for a recent medical-school graduate than for a physician with a well-established practice. C) the value of the time when spent in its next best use. D) zero under a system of complete and comprehensive medical insurance.
A reduction in the price charged for luncheon specials by a downtown cafeteria will
A) affect the demand (curve) for that cafeteria's luncheons if its competitors react. B) have no effect on the demand for lunch at other downtown restaurants. C) increase the cafeteria's gross revenue from lunch business. D) increase the cafeteria's net revenue from lunch business if the demand is elastic. E) increase the cafeteria's net revenue from lunch business if the demand is inelastic.