Which of the following statements is INCORRECT regarding the model for information products?
A) Average total costs slope downward, because average variable cost is constant, average fixed cost slopes downward.
B) The firm maximizes profit by setting the price of its product equal to marginal cost.
C) Marginal cost equals average variable cost.
D) In the long run, accounting profit is positive.
B
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What happens when two countries apply tariffs against each other in an attempt to capture their terms-of-trade gain?
a. Both countries lose because the terms-of-trade gain for one country is canceled by the tariff in the other country. b. Both countries gain because the terms-of-trade gain for one country is canceled by the tariff in the other country. c. Neither country gains nor loses because the terms-of-trade gain for one country is canceled by the tariff in the other country. d. The country initially applying the tariff gains because it captures the terms-of-trade gain; the other country neither gains nor loses.
Refer to Figure 5-9. The private profit-maximizing output level is
A) Q1. B) Q2. C) Q3. D) Q4.