9.3 Short-Run Decisions Assume the Following Total Cost Schedule for a Perfectly Competitive

question 51

Multiple Choice

9.3 Short-Run Decisions
Assume the following total cost schedule for a perfectly competitive firm.
TABLE 9-2
-Refer to Table 9-2.If the firm is producing at an output level of 4 units,the ATC is ________ and the AVC is ________.

• A)$280; $180
• B)$25; $45
• C)$70; $45
• D)$70; $35
• E)$180; $100

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Definitions:

Substitution Effect

The economic understanding that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

The change in an individual's or economy's purchasing power due to a change in income, affecting the quantity of goods and services bought.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a resource.

Dual Labor Market Theory

An economic theory that suggests the labor market is divided into two segments: the primary market, with secure, well-paid jobs, and the secondary market, characterized by low pay, job insecurity, and little room for advancement.