After an increase in demand in a constant-cost industry, firms will find themselves with higher average cost curves

The above figure shows the utility of wealth curve for a homeowner whose only possession is a $50,000 house

If there is a 20 percent chance that the home could be entirely destroyed, would this person buy a $20,000 insurance policy to replace the house if destroyed? A) No, it is too expensive. B) No, he is not risk averse. C) Yes, the homeowner would pay even more. D) Yes, this is the most the homeowner would pay.

When do diminishing marginal returns occur?

(A) When some workers increase output but others decrease it. (B) When extra workers will have to wait their turn to be productive. (C) When the marginal product of labor increases as the number of workers increases. (D) When additional workers increase total output at a decreasing rate.