Microeconomics

In a two-agent and two-good economy, a competitive market equilibrium

In a two-agent and two-good economy, a competitive market equilibrium occurs when A) the agents’ indifference curves are tangent to the price line. B) the agents’ marginal rate of substitution are zero. C) the excess supply exceeds the excess demand. D) the agents’ indifference curves intersect the price line.   ANSWER A  

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Date: September 9th, 2020

Explain why the marginal cost curve intersects a U-shaped average cost

Explain why the marginal cost curve intersects a U-shaped average cost curve at its minimum point. What will be an ideal response?   ANSWER At low quantities, the average cost curve declines as the quantity increases. The marginal cost is below the average cost. The marginal cost represents the cost of an additional unit of […]

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Date: September 9th, 2020

Assume Congress decides that oil companies are making too much profit

Assume Congress decides that oil companies are making too much profit and decides to tax oil companies for each gallon of gasoline produced. This would A) shift the marginal cost curve up. B) shift the marginal cost curve down. C) shift the average fixed cost curve up. D) shift the average fixed cost curve down. […]

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Date: September 9th, 2020