Suppose that at the current level of output, price = $12, MC = $4, AVC = $7, and ATC = $11. Which of the following is TRUE?
A) The firm should decrease output.
B) The firm should shut down.
C) The firm should increase output.
D) The firm should maintain the current level of output.
C
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As there is a movement upward and leftward along the AD curve,
a. aggregate expenditure decreases b. the price level remains constant c. equilibrium GDP increases d. aggregate expenditure increases e. the interest rate falls
Suppose price decreases from $27.00 to $13.00. Using the mid-point formula, the percentage change in price is:
A. 0.7 = 70 percent. B. 14 percent. C. - 0.7 = - 70 percent. D. - 0.35 = - 35 percent.
The price of pineapples has risen dramatically. Which of the following is likely to happen?
A. The quantity of pineapples supplied will increase. B. The quantity of pineapples supplied will decrease. C. The supply of pineapples will decrease. D. The supply of pineapples will increase.
One cost of a perfectly anticipated inflation is that it
A. increases menu costs. B. transfers wealth from lenders to borrowers. C. transfers wealth from borrowers to lenders. D. damages the role of prices as signals in the economy.