Happy Cows is a dairy farm that is currently earning $20,000 in economic profit. The managers of Happy Cows are considering adding a second dairy farm; however, the managerial diseconomies from adding the second farm cause Happy Cows current farm's economic profit to fall to $15,000. It is economically sound for Happy Cows to add the second farm if ________.
A) the second farm's economic profit is at least $4,800
B) the second farm's economic profit is at least $4,000
C) the second farm's economic profit is less than $5,000
D) the second farm's economic profit exceeds $5,000
D) the second farm's economic profit exceeds $5,000
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Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because
A) some of its customers have switched to purchasing the products of new entrants in the market. B) as the firm raises its price in the long run, it will lose some customers to new entrants in the market. C) its costs of production rises. D) new entrants into the market are more likely to have cutting edge products.
Fluctuations in the relative demand for stock market mutual funds versus money-market mutual funds causes instability in the overall demand for
A) M1 but not M2. B) M2 but not M1. C) M2 and M1. D) neither M1 nor M2.
Which of the following does NOT shift the U.S. aggregate demand curve?
A. an increase in the supply of money B. an increase in GDP in Japan C. a decrease in taxes D. a decrease in the price level
An increase in interest rates by the Fed based on a given and unchanged policy reaction function represents a ________ the aggregate demand curve, and higher interest rates resulting from an upward shift in the Fed's policy reaction function represents a ________ the aggregate demand curve.
A. movement up; shift left of B. movement up; shift right C. shift left of; movement up D. shift left of; shift right of