The fixed-cost fallacy occurs when
a. A firm considers sunk costs in making decisions
b. A firm ignores relevant costs
c. A firm considers overhead or depreciation costs in making decisions
d. Both a and c
d
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When used in a professional or technical sense, the law of supply and demand refers to
a. some vague influences on economic affairs. b. the fact that prices go up when commodities are scarce. c. the market forces that show how prices and quantities are determined. d. the controls that regulate the amount of scarce goods that each consumer can purchase.
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500.What is the marginal cost?
A. $0.63 B. $3.20 C. $1.60 D. $0.94 E. none of the above