Other Things Equal, If the Prices of a Firm's Variable

question 299

Multiple Choice

Other things equal, if the prices of a firm's variable inputs were to fall,

• A)one could not predict how unit costs of production would be affected.
• B)marginal cost, average variable cost, and average fixed cost would all fall.
• C)marginal cost, average variable cost, and average total cost would all fall.
• D)average variable cost would fall, but marginal cost would be unchanged.

Comprehend the income elasticity of demand and its impact on quantity demanded following an income change.

Recognize the difference between normal and inferior goods based on income elasticity values.

Understand elasticity of supply and its relevance in market dynamics.

Identify factors influencing elasticity of demand, including time and necessity of goods.

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Definitions:

Common Resources

Resources that are accessible to all members of a society but are susceptible to overutilization and depletion.

Private Good

A product or service that is excludable and rival in consumption, meaning only those who pay for it can consume it, and one person’s consumption prevents another's.

Common Resource

A type of good that is non-excludable but rivalrous, meaning it's available to everyone but its consumption by one individual diminishes its availability for others.

Tragedy of the Commons

A situation where individual users, acting independently according to their own self-interest, deplete or spoil shared resources, even though it is not in anyone's long-term interest.