If AVC is $10 when P = MC, a firm
A) will have positive economic profits if price is greater than $10.
B) is producing too little output.
C) should shut down if price is less than $10.
D) is experiencing economies of scale.
Answer: C
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The supply-siders argue that investment is
a. primarily a function of current income. b. highly responsive to changes in after-tax real interest rates. c. primarily a function of expectations. d. both a and b.
If a poor country is going to grow rapidly and achieve a high level of per capita income, which of the following is most important?
What will be an ideal response?
Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.
Figure 2.4According to Figure 2.4, Point E necessarily represents
A. only motorcycles being produced. B. overallocation of resources. C. an impossible production point. D. technological advancement.
You are hired by the Bureau of Economic Analogies (BEA) as an economic consultant. The Chairperson of the BEA tells you that he believes the current unemployment rate is too low. The unemployment rate can be increased if aggregate output decreases. He wants to know what policy to pursue to decrease aggregate output by $100 billion. The best estimate he has for the MPC is 0.9. Which of the following policies should you recommend?
A. Cut taxes by $60 billion and to increase government spending by $60 billion. B. Decrease government spending by $100 billion. C. Decrease government spending by $10 billion. D. Increase taxes by $100 billion.