When the marginal-cost curve lies above the average-total-cost curve, the average-total-cost curve slopes up and the average-variable-cost curve slopes down.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2I'm losing money, but since my fixed costs are so high, I simply cannot afford to shut down. If the firm were attempting to maximize profit, this decision may be:
a. correct if price is less than average variable cost.
b. incorrect because a firm experiencing economic losses should never continue to operate.
c. correct if the firm is covering all of its variable costs.
d. incorrect since a firm should shut down whenever price falls below average total cost in the short run.
QUESTION 3A Gini of 0 implies that:
a. every family has an equal amount of income.
b. the top 10 of the families appropriate almost 100 of the total income.
c. the bottom 90 of the families have only 10 of the total income.
d. the bottom 20 of the families have 80 of the total income.
e. only 1 family appropriates the entire national income.
QUESTION 4Which of the following statements is true about the trends in the flow of international trade witnessed in India since its independence?
a. Trade liberalization was unable to boost India's economy in the first few decades of independence.
b. Indian software exports now reflect an annual growth rate of an impressive 55 percent.
c. The opening of trade and modern telecommunications allowed India's production set to expand and gain comparative advantage in software.
d. Trade has enabled Indian engineers to command higher wages than most other nations specializing in software.
QUESTION 5If marginal physical product of labor is declining, then average physical product must also be declining.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 6A profit-maximizing firm in a perfectly competitive market will always produce a quantity of output that:
a. minimizes the per-unit cost of production.
b. is expected to maximize total revenue.
c. maximizes the amount by which total revenue exceeds total cost.
d. brings average total cost and price into equality.
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