EC120 Study Guide - Midterm Guide: Demand Curve, Average Variable Cost, Average Cost
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Part a: answer each question by marking the computer card with the best answer: an economy can produce video games and houses. Before entering the concert hall she is approached by someone who is prepared to pay her for her ticket. Andrea"s opportunity cost of going to the concert is zero. Revenues are ,000 per year and raw materials costs (cloth, thread) are ,000 per year. Sue owns her own store and thus does not pay any rent. If she rented out her store she could earn ,000 per year in rent. In order to run her business sue had to give up a ,000 per year job. If mp > ap then ap must be rising. If ap > mp then mp must be rising. If mp is falling then ap must be falling. If ap = mp then mp is maximized: both a) and c) are correct.
