Keith is a perfectly competitive carnation grower. The market price is $2 per dozen carnations. Keith's average total cost to grow carnations is $2.50 per dozen. In the long run, Keith will
A) raise his price to more than $2.50 per dozen carnations.
B) raise his price to $2.50 per dozen carnations.
C) exit the industry if the price and his costs do not change.
D) incur an economic loss.
E) continue to make an economic profit.
C
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When we hear on the news, "The Fed has lowered interest rates today," the Fed has most likely
A) raised the discount rate. B) lowered the required reserve ratio. C) raised the federal funds rate. D) purchased government bonds.
Due to the private nature of bank ownership, there is often a difference between bankers’ goals and macroeconomic objectives.
Answer the following statement true (T) or false (F)
Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this firm to do?
A. Increase output. B. Decrease output. C. Stay at the current output; the firm is losing $200. D. Stay at the current output; the firm is earning a profit of $400.
Which of the following is a characteristic of perfect competition?
A. differentiated products B. few firms C. easy entry and exit D. none of these