question

Picture

The consumer's income is $800.

According to the above figure, what are the prices of goods X and Y? a.

The consumer's income is $800.

According to the above figure, what are the prices of goods X and Y? a.

answer

PX = $8, PY = $10

question

A price-setting firm faces the following estimated demand and average variable cost functions:

Qd = 800,000 - 2,000P + 0.7M + 4,000PR

AVC = 500 - 0.03Q + 0.000001Q2

where Qd is the quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $53. Total fixed cost is $2,600,000. What is the estimated demand function for the firm?

Qd = 800,000 - 2,000P + 0.7M + 4,000PR

AVC = 500 - 0.03Q + 0.000001Q2

where Qd is the quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $53. Total fixed cost is $2,600,000. What is the estimated demand function for the firm?

answer

Qd = 1,040,000 - 2,000P

question

The manufacturer of Beanie Baby dolls used quarterly price data for 2005I - 2013IV (t = 1, ..., 36) and the regression equation

Pt = a + bt + c1D1t +c2D2t + c3D3t

to forecast doll prices in the year 2014.Pt is the quarterly price of dolls, and D1t,D2t and D3t are dummy variables for quarters I, II, and III, respectively.

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Using the estimated time-series regression, predicted price in the 2nd quarter of 2014 is

Pt = a + bt + c1D1t +c2D2t + c3D3t

to forecast doll prices in the year 2014.Pt is the quarterly price of dolls, and D1t,D2t and D3t are dummy variables for quarters I, II, and III, respectively.

Picture

Using the estimated time-series regression, predicted price in the 2nd quarter of 2014 is

answer

$48.40

question

Below, the graph on the left shows the short-run cost curves for a firm in a perfectly competitive market, and the graph on the right shows the current market conditions in this industry. What do you expect to happen in the long-run?

Picture

Picture

answer

both b and c

question

Marginal utility is

the utility obtained from t

the utility obtained from t

answer

the change in utility that results from increasing the amount of a good consumed by one unit.

question

Price leadership

answer

none of the above

question

Refer to the following nonlinear model which relates W to P, Q, and R:

W = aPbQcRd

The computer output form the regression analysis is:

Picture

Based on the info above, which of the parameter estimates are statistically significant at the 5% level of significance?

W = aPbQcRd

The computer output form the regression analysis is:

Picture

Based on the info above, which of the parameter estimates are statistically significant at the 5% level of significance?

answer

All the parameter estimates are statistically significant.

question

Suppose the demand for good X is Q = 500P-1. This demand curve has a ________ (constant, variable) elasticity of demand equal to ________.

answer

constant; -1

question

Given the table below, if capital is fixed at two units, what is the marginal product of the fourth unit of labor?

Picture

Amount of total output produced from various combinations of labor and capital.

Picture

Amount of total output produced from various combinations of labor and capital.

answer

none of the above

question

In the figure above, what is the point price elasticity of demand when price is $80?

answer

-2.00

question

Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.

Picture

Given the above information, and given a budget of $550, the maximum possible number of sales is

Picture

Given the above information, and given a budget of $550, the maximum possible number of sales is

answer

1,960.

question

A clinic uses doctors and nurses to serve the maximum number of patients given a limited annual payroll. The clinic currently has 10 doctors and 30 nurses. The last doctor hired can serve 300 additional patients, while the last nurse hired can serve 200 additional patients. If doctors make $60,000 a year and nurses make $20,000 a year, the clinic

answer

could serve more patients with the same payroll by hiring more nurses and fewer doctors.

question

A price-setting firm

answer

can lower the price of its product and sell more units.

question

A firm produces 4,000 units of output using 500 workers. Marginal cost is $10, the wage rate is $160, and total fixed cost is $100,000.What is the marginal product of labor?

answer

16 units of output per worker

question

In order to minimize losses in the short run, a perfectly competitive firm should shut down if

answer

total revenue is less than total variable cost.

question

Which of the following is (are) characteristics of an isocost curve?

answer

both a and c

question

One reason a firm or firms might charge a price lower than its profit-maximizing price is

answer

to discourage the entry of new firms.

question

Picture

In the figure above, if price INCREASES from $60 to $80, an arrow representing the PRICE effect

In the figure above, if price INCREASES from $60 to $80, an arrow representing the PRICE effect

answer

both a and d

question

If marginal product is decreasing, then it must be the case that

answer

none of the above.

question

Based on the following table, what is total variable cost when 100 units of output are produced?

Picture

Picture

answer

none of the above

question

Which of the following will NOT make cooperation more likely?

answer

any action that makes it more costly to monitor rival's prices.

question

If a firm is producing the level of output at which long-run average cost equals long-run marginal cost, then

answer

long-run average cost is at its minimum point.

question

The demand for heart surgery is price inelastic. So it follows that

answer

if the price of heart surgery increases, total expenditure by consumers on heart surgery will rise.

question

A firm with market power faces the following estimated demand and average variable cost functions:

Qd = 39,000 - 500P + 0.4M - 8,000PR

AVC = 30 - 0.005Q + 0.0000005Q2

where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. The firm should ______________ because _______________.

Qd = 39,000 - 500P + 0.4M - 8,000PR

AVC = 30 - 0.005Q + 0.0000005Q2

where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. The firm should ______________ because _______________.

answer

operate, P = $62 > AVC = $22

question

A continuous choice variable

answer

none of the above

question

Which of the following is NOT a characteristic of an increasing cost competitive industry? As the industry expands in the long run,

answer

the price of product remains constant.

question

With a cubic production function of the form Q = aK3L3 + bK2L2, in order for the average and marginal product functions to have their usual theoretical properties, it must be the case that

answer

a< 0, b> 0 b.

question

A firm estimates its long-run production function to be

-0.0075K3L2 + 12K2L2

Suppose the firm employs 12 units of capital. At ________ units of labor, average product of labor begins to diminish.

-0.0075K3L2 + 12K2L2

Suppose the firm employs 12 units of capital. At ________ units of labor, average product of labor begins to diminish.

answer

66.67

question

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below. The firm incurs weekly fixed costs of $1,800. The firm employs a single variable input, labor, which costs $600 per worker each week.

Picture

Given the above, suppose the weekly wage rate increases to $1,400 per worker. The firm would hire _______ workers and earn a profit of _______ per week.

Picture

Given the above, suppose the weekly wage rate increases to $1,400 per worker. The firm would hire _______ workers and earn a profit of _______ per week.

answer

0 ; -$1,800

question

All of the following could be a barrier to entry EXCEPT:

answer

switching costs.

question

Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form

AVC = a + bQ + cQ2

and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.

Picture

If Straker Industries produces 12 units of output, what is estimated average total cost (ATC)?

AVC = a + bQ + cQ2

and obtained the following results. Total fixed cost (TFC) at Straker Industries is $1,000.

Picture

If Straker Industries produces 12 units of output, what is estimated average total cost (ATC)?

answer

$121.93

question

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: In order to maximize utility subject to her budget constraint, this consumer should buy how many units of good X?

Picture

In order to maximize utility subject to her budget constraint, this consumer should buy how many units of good X?

Picture

In order to maximize utility subject to her budget constraint, this consumer should buy how many units of good X?

answer

4

question

The estimated demand for a good is

â=4800 - 16p - 0.65M - 1.5PR

whereQ is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. If the price of the good rises by $10, all else constant, the quantity demanded will ________ by ________ units.

â=4800 - 16p - 0.65M - 1.5PR

whereQ is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. If the price of the good rises by $10, all else constant, the quantity demanded will ________ by ________ units.

answer

decrease; 160 units

question

Average fixed cost

answer

decreases as output increases.

question

When the average price of videocassette recorders (VCRs) falls, the result is

answer

an increase in the quantity of VCRs demanded.

question

If a firm is producing the level of output at which short-run average cost equals long-run average cost, then

answer

both a and b

question

A competitive firm will maximize profit by producing the level of output at which

answer

both a and c

question

A firm is currently producing 10 units of output; marginal cost is $24 and average total cost is $6 at this level of output. The average total cost at 9 units of output is:

answer

$4

question

Use the following table to answer the question below:

The amount of total output produced from various combinations of labor and capital.

Picture

If the amount of labor used increases from three to four units, the marginal product of the second unit of capital

The amount of total output produced from various combinations of labor and capital.

Picture

If the amount of labor used increases from three to four units, the marginal product of the second unit of capital

answer

increases by 8 units.

question

Diseconomies of scale

answer

exist when long-run average cost increases as output increases.

question

A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.

Picture

Given the above info, if each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire?

Picture

Given the above info, if each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire?

answer

4

question

Suppose that 2 units of X and 8 units of Y give a consumer the same satisfaction as 4 units of X and 2 units of Y. Then

answer

both a and c

question

Picture

The above graph shows the demand and cost conditions facing a price-setting firm. The firm will produce _____ units of output and charge a price of _____.

The above graph shows the demand and cost conditions facing a price-setting firm. The firm will produce _____ units of output and charge a price of _____.

answer

none of the above

question

A parameter estimate is said to be statistically significant if there is sufficient evidence that the

answer

true value of the parameter does not equal zero.

question

A firm will maximize profit by producing that level of output at which

answer

both b and c

question

In order to maximize profit, a firm that produces its output in two plants will produce the level of total output at which the last unit of output produced adds the same amount to total revenue as to the

answer

firm's total cost

question

A firm with market power faces the following estimated demand and average variable cost functions:

Qd = 39,000 - 500P + 0.4M - 8,000PR

AVC = 30 - 0.005Q + 0.0000005Q2

where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the estimated marginal revenue function for the firm?

Qd = 39,000 - 500P + 0.4M - 8,000PR

AVC = 30 - 0.005Q + 0.0000005Q2

where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $2. Total fixed cost is $100,000. What is the estimated marginal revenue function for the firm?

answer

MR = 78 - 0.004Q

question

In the nonlinear function Y = aXbZc , the parameter c measures

answer

both b and c

question

An average variable cost function is estimated as

AVC = 96 − 2Q + 0.05Q2

Which of the following cost functions is associated with this estimate?

AVC = 96 − 2Q + 0.05Q2

Which of the following cost functions is associated with this estimate?

answer

SMC = 96 - 4Q + 0.1Q2

TVC = 96Q- 2Q2 + 0.05Q3

TVC = 96Q + 4Q2 + 0.15Q3

SMC = 96 - 4Q + 0.15Q2

both b and d

TVC = 96Q- 2Q2 + 0.05Q3

TVC = 96Q + 4Q2 + 0.15Q3

SMC = 96 - 4Q + 0.15Q2

both b and d

question

Given the table below, the maximum amount that can be produced using 20 workers is

Picture

Picture

answer

530 units.

question

A short-run cost function assumes that

answer

at least one input is fixed in supply.

question

Picture

The above graph shows the demand and cost conditions facing a price-setting firm. When output is 50 units, what will happen to total revenue if the firm sells another unit of output?

The above graph shows the demand and cost conditions facing a price-setting firm. When output is 50 units, what will happen to total revenue if the firm sells another unit of output?

answer

Total revenue will increase $6.00.

question

Refer to the following figure. When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?

Picture

Picture

answer

-1

question

Picture

Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit. When the firm uses 6 units of labor, what is marginal cost?

Above is a firm's average product of labor and marginal product of labor curves. The price of labor is $60 per unit. When the firm uses 6 units of labor, what is marginal cost?

answer

$5

question

Consider the statement: "When the British government tripled university fees for foreign students in Great Britain, about one-half of them left to study in other countries." This move will ___________ university revenues from foreign students in Great Britain

answer

increase

question

In order to maximize profit, a firm that produces its output in two plants will allocate total output between the two plants so that

answer

marginal cost is equal for the two plants.

question

The quadratic equation Y = a + bX +cX2 can be estimated using linear regression by estimating

answer

none of the above will work

question

The manager of Greene Enterprises, Inc., recently estimated its average variable cost (AVC) function to be

AVC = 88 - 0.026 + 0.000003Q2

Greene Enterprises faces total fixed costs (TFC) of $300,000. If Greene Enterprises produces 6,000 units of output, what is estimated average total cost (ATC)?

AVC = 88 - 0.026 + 0.000003Q2

Greene Enterprises faces total fixed costs (TFC) of $300,000. If Greene Enterprises produces 6,000 units of output, what is estimated average total cost (ATC)?

answer

$90

question

When economic profit is positive,

answer

total revenue exceeds total economic cost.

question

Refer to the following indifference map for a consumer who has an income of $48 to spend on goods X and Y and the market prices of X and Y are both $4: Now suppose the price of good X increases to $12 while the price of good Y remains $4. Utility will be maximized on which indifference curve?

Picture

Now suppose the price of good X increases to $12 while the price of good Y remains $4. Utility will be maximized on which indifference curve?

Picture

Now suppose the price of good X increases to $12 while the price of good Y remains $4. Utility will be maximized on which indifference curve?

answer

II

question

If Mary prefers bananas to plums and plums to peaches, but is indifferent between bananas and oranges, she

answer

prefers oranges to peaches.

question

Credible commitments give committing firms

answer

both a and c

question

Use the following general linear demand relation:

Qd = 100 - 5P +0.004M - 5PR

where P is the price of good X, M is income, and PR is the price of a related good, R. Income is $80,000, and the price of the related good is $40. Also let consumers' tastes change so that consumers now demand 100 more units at each price. When the price of the good is $50, how many units of the good are demanded?

Qd = 100 - 5P +0.004M - 5PR

where P is the price of good X, M is income, and PR is the price of a related good, R. Income is $80,000, and the price of the related good is $40. Also let consumers' tastes change so that consumers now demand 100 more units at each price. When the price of the good is $50, how many units of the good are demanded?

answer

70

question

Consider a competitive industry and a price-taking firm that produces in that industry. The market demand and supply functions are estimated to be:

Demand: Qd = 10,000 - 10,000P + 1.0M

Supply: Qs = 80,000 + 10,000P - 4,000P1

where Q is quantity, P is the price of the product, M is income, and P1 is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and P1 for 2015:

̂M̂ = $50,000 and P̂1 = $20

The manager also estimates the average variable cost function to be

AVC = 3.0 - 0.0027Q + 0.0000009Q2

Total fixed costs will be $2,000 in 2015. Average variable cost reaches its minimum value of _____ units of output.

Demand: Qd = 10,000 - 10,000P + 1.0M

Supply: Qs = 80,000 + 10,000P - 4,000P1

where Q is quantity, P is the price of the product, M is income, and P1 is the input price. The manager of the perfectly competitive firm uses time-series data to obtain the following forecasted values of M and P1 for 2015:

̂M̂ = $50,000 and P̂1 = $20

The manager also estimates the average variable cost function to be

AVC = 3.0 - 0.0027Q + 0.0000009Q2

Total fixed costs will be $2,000 in 2015. Average variable cost reaches its minimum value of _____ units of output.

answer

1,500

question

Refer to the following figure. The price of capital is $50 per unit:

Picture

Which of the following combinations of capital and labor lies on the expansion path?

Picture

Which of the following combinations of capital and labor lies on the expansion path?

answer

130K, 175L

question

Picture

In the table above, how much does the third unit of labor ADD to total output?

In the table above, how much does the third unit of labor ADD to total output?

answer

none of the above

question

Demand equations derived from actual market data are

answer

both a and c

question

A risk premium is

answer

a measure calculated to reflect the riskiness of future profits.

question

If profits depend on both how much is produced (output) and the level of quality, then a profit-maximizing firm should choose the levels of output and quality at which

answer

none of the above

question

Gigi consumes only Perrier and cheese. In order to maximize her happiness subject to limited income, Gigi should purchase the amounts of Perrier and cheese at which

answer

both b and c

question

A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1,600 extra patients in a year, while the last nurse hired treated 1,000 extra patients in a year. If doctors make $64,000 a year and nurses make $40,000 a year, then

answer

the clinic is making the correct decision.

question

Refer to the following figure. What is the equation for marginal revenue?

Picture

Picture

answer

MR = 20 - 0.01Q

question

If E1 is the demand elasticity for a product after a price change has been in effect one day, E2 is the demand elasticity for that product after one week, and E3 is demand elasticity for that product after one month,

answer

|E3|> |E2| > |E1|

question

Choice variables

answer

determine the value of the objective function

question

Refer to the following figure. The price of capital is $50 per unit:

Picture

How many units of capital should the firm use to produce 800 units of output at least cost?

Picture

How many units of capital should the firm use to produce 800 units of output at least cost?

answer

102

question

Short-run average cost is

answer

none of the above

question

Refer to the following table which gives the demand and cost data for a price-setting firm:

Picture

Picture

answer

$108

question

Profits are interdependent in oligopoly markets because

answer

each firm in the market is relatively large.

question

To answer, refer to the following:

"At Huffy's ... bicycle factory, 1,700 employees turn out 15,000 bicycles a day (in 1987). Five years before, it required 2,200 workers to make 10,000 bikes daily." (The Wall Street Journal).

Holding all else equal, we can conclude that, over those years,

"At Huffy's ... bicycle factory, 1,700 employees turn out 15,000 bicycles a day (in 1987). Five years before, it required 2,200 workers to make 10,000 bikes daily." (The Wall Street Journal).

Holding all else equal, we can conclude that, over those years,

answer

Huffy's average variable cost decreased.

question

Economic profit

answer

is negative when total costs exceed total revenues.

question

An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency hires operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).

Picture

Based on the above information, if operators receive $25 an hour, how many operators should the agency hire?

Picture

Based on the above information, if operators receive $25 an hour, how many operators should the agency hire?

answer

2

question

Use the following general linear supply function:

Qs = 40 + 6P - 8PI + 10F

where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. If PI = $20, F = 60, and the demand function is Qd = 600 - 6p the equilibrium price and quantity are, respectively,

Qs = 40 + 6P - 8PI + 10F

where Qs is the quantity supplied of the good, P is the price of the good, PI is the price of an input, and F is the number of firms producing the good. If PI = $20, F = 60, and the demand function is Qd = 600 - 6p the equilibrium price and quantity are, respectively,

answer

P = $10 and Q = 540.

question

A firm is producing 10,000 units of output in two plants, A and B, and each plant is producing 5,000 units of output. The marginal cost in plant A is $10 and the marginal cost in B is $6. To reduce the cost of producing 10,000 units the firm should

answer

produce less in A and more in B.

question

To answer the question, refer to the following table showing a demand schedule:

Picture

If price rises from $100 to $150,

Picture

If price rises from $100 to $150,

answer

total revenue moves up as indicated by the direction of the arrow representing the price effect.

question

To answer the question, refer to the following table showing a demand schedule:

Picture

If price falls from $200 to $150,

Picture

If price falls from $200 to $150,

answer

total revenue moves in the same direction as the arrow representing the quantity effect.

question

At the beginning of 2015, market analysts expect Atlantis Company, holder of a valuable patent, to earn the following stream of economic profits over the next five years. At the end of five years, Atlantis will lose its patent protection, and analysts expect economic profit to be zero after five years.

Picture

If investors apply an annual risk-adjusted discount rate of 15%, the value of Atlantis Company in 2015 is $______________________, which is also the maximum price investors would be willing to pay for Atlantis Company.

Picture

If investors apply an annual risk-adjusted discount rate of 15%, the value of Atlantis Company in 2015 is $______________________, which is also the maximum price investors would be willing to pay for Atlantis Company.

answer

$884,912

question

The price of X is $20 and the price of Y is $40.

Picture

Based on the above graph, at point B,

Picture

Based on the above graph, at point B,

answer

the marginal rate of substitution is ½.

question

Using time-series data, the demand function for a profit-maximizing monopolist has been estimated as

Qd = 142,000 - 500P + 6M - 400PR

where Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:

MC = 200 - 0.024Q + 0.000006Q2

Total fixed cost is forecast to be $500,000 in 2016.What is the profit-maximizing (or loss-minimizing) level of production?

Qd = 142,000 - 500P + 6M - 400PR

where Qd is the amount sold, P is price, M is income, and PR is the price of a related good. The estimated values for M and PR in 2014 are $25,000 and $200, respectively. The short-run marginal cost curve for this firm has been estimated as:

MC = 200 - 0.024Q + 0.000006Q2

Total fixed cost is forecast to be $500,000 in 2016.What is the profit-maximizing (or loss-minimizing) level of production?

answer

8,000 units

question

A short-run production function was estimated as

Q = −0.002L3 + 0.16L2

At 60 units of labor, what is average product?

Q = −0.002L3 + 0.16L2

At 60 units of labor, what is average product?

answer

2.4

question

In the following graph, the price of capital is $100 per unit. What is the marginal rate of technical substitution at point C?

Picture

Picture

answer

none of the above

question

Firms that employ exceptionally productive resources

answer

both b and c

question

Derrick owns and operates a bakery. Every Saturday he bakes a batch of fresh kolaches, and every Saturday he sells all the kolaches and has to turn some customers away. Which of the following statements is correct?

answer

both a and c

question

Consider the statement: "When the British government tripled university fees for foreign students in Great Britain, about one-half of them left to study in other countries." The implied price elasticity of demand by foreigners for a British education is (in absolute value)

answer

less than 1.

question

Refer to the following graph. The price of labor is $3 per unit:

Picture

What is the minimum cost of producing 100 units of output?

Picture

What is the minimum cost of producing 100 units of output?

answer

$105

question

In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; average total cost is $10, marginal cost is $15, and average variable cost is $7. In order to maximize profit, the firm should:

answer

produce less because the last unit of output decreased profit by $3.

question

Suppose an individual buyer values a pound of butter at $10. If the market price of butter is $8, what is the consumer surplus for this buyer?

answer

$2

question

Picture

In the above graph, the shift from I to II was due to

In the above graph, the shift from I to II was due to

answer

a decrease in the price of capital.

question

In every prisoners' dilemma situation, cooperation

answer

is possible.

question

A toy manufacturer is experiencing quality problems on its assembly line. Every defective toy that leaves the factory costs the firm $20. The firm has decided to hire quality inspectors to catch defective toys before they leave the factory.

Picture

Given the above information, if the cost of each defective toy rises to $50, while inspectors are paid $150 a day, how many inspectors should the firm hire?

Picture

Given the above information, if the cost of each defective toy rises to $50, while inspectors are paid $150 a day, how many inspectors should the firm hire?

answer

5

question

Average total cost

answer

increases if marginal cost is greater than average total cost.