A firm will always maximize profit at the level of output where average total costs are minimized.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2A long run supply curve:
a. will rise if diminishing returns are encountered.
b. will rise if diseconomies of scale are encountered.
c. assumes that all resources are variable.
d. is characterized by both (b) and (c).
QUESTION 3What is known as the Dutch disease?
a. The problem that arises when a government cannot meet its foreign debts
b. The phenomenon of a boom in one industry causing declines in the rest of the economy
c. A sudden and unexpected devaluation of a currency as a consequence of policy controls
d. The problem that arises when high imports force an economy to borrow from external sources
e. A deficit in the balance of payments of the economy that arises due to a sudden appreciation of the domestic currency
QUESTION 4Which of the following is a property of a forward contract?
a. In a forward contract cash is traded for immediate delivery.
b. The buyer of a forward contract is short while the seller of the contract is long.
c. In a forward contract, the seller must own the commodity which is being traded.
d. The value of future delivery depends on the market price of the commodity.
QUESTION 5If marginal revenue is greater than marginal cost, a producer must reduce the level of output to maximize profit.
a. True
b. False
Indicate whether the statement is true or false
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