Refer to the graph shown. Total revenue is at a maximum when price is:
A. $6.
B. $8.
C. $4.
D. $2.
Answer: C
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As producers have more time to adjust to a price change, price elasticity of supply
a. increases b. decreases c. remains the same d. rises and then falls e. falls and then rises
If government increased Social Security benefits and decreased the salaries of government workers by the same amount, which of the following is the expected immediate effect? a. An increase in the budget deficit and government purchases of goods and services
b. An increase in the budget deficit, but no change in government purchases of goods and services. c. An increase in the budget deficit and a decrease in government purchases of goods and services. d. No change in the budget deficit because there has been no change in government purchases of goods and services. e. No change in the budget deficit because government purchases of goods and services have decreased by the same amount as transfer payments have increased.
A monopolist faces the inverse demand curve P = 60 - Q. It has variable costs of Q2 so that its marginal costs are 2Q, and it has fixed costs of 30. The monopoly's maximum profit is
A) 220. B) 370. C) 420. D) 510.
In practice, one of the principal problems with aggregate demand management is that
A. changes in aggregate demand cannot reduce unemployment. B. stabilization policies could increase aggregate demand too much and at the wrong times. C. changes in aggregate demand are highly inflationary. D. changes in aggregate demand do not affect output.