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Author Question: What is the relationship between average total cost, average variable cost, and average fixed cost? ... (Read 118 times)

809779

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on: Jun 29, 2018
What is the relationship between average total cost, average variable cost, and average fixed cost? If average total cost is 5.76 and average fixed cost is 1.35, what is the level of average variable cost?
 
  What will be an ideal response?

Question 2

Some economists argue that the short-run Phillips curve is not vertical, and that monetary policy can be effective in the short run. Which one of the following is not one of the reasons for this skepticism?
 
  A) Wages and prices may not adjust rapidly enough to keep the short-run Phillips curve vertical.
  B) Individuals may not be able to use information of Fed Policy to make a reliable forecast of inflation.
  C) Empirical evidence shows workers and firms have rational expectations.
  D) Contracts with workers and suppliers may hinder firms' abilities to adjust to price changes.


livaneabi

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Average total cost is equal to the sum of average variable cost and average fixed cost. Thus, average variable cost is equal to average total cost minus average fixed cost or 5.76 - 1.35 = 4.41 .

Answer to Question 2

C


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