Assume that the full-employment level of output is $2,000 and the price level associated with full-employment output is 100. Also assume that the economy's current level of output is $1,900 and, at the price level of 100, current aggregate demand is $1,850. If the government moves the economy back to the full-employment level of output by increasing government purchases by $30, then the MPC equals
A. 0.8.
B. 0.5.
C. 0.6.
D. 0.75.
Answer: A
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If a marginal cost pricing rule is imposed on the natural monopoly in the figure above, then the firm will
A) incur an economic loss. B) make zero economic profit, that is, its owners make a normal profit. C) make an economic profit of $4 million. D) make an economic profit of $16 million.
The trade model described in the text demonstrates that countries can expand consumption by specializing in the production of goods and services in which they have a comparative advantage
In reality we do not see complete specialization in production. State three reasons why this is case.
________ in the foreign interest rate causes the demand for domestic assets to shift to the right and the domestic currency to ________, everything else held constant
A) An increase; appreciate B) An increase; depreciate C) A decrease; appreciate D) A decrease; depreciate
For a monopsonist, the supply of labor facing the firm is:
A. an insignificant portion of the market supply. B. perfectly horizontal. C. identical to the supply curve facing the market. D. the summation of each firm's demand for labor.