The short-run industry supply curve is found by
A) taking the inverse of the industry demand curve.
B) horizontally summing the average total cost curve of all firms in the industry.
C) adding up the quantities supplied at each price by each firm in the industry.
D) adding up the quantities supplied at each price by each of the firms in the industry that are making a profit.
Answer: C
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Refer to Figure 16-2. Suppose Plato Playhouse price discriminates. Which of the following statements is true?
A) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby increasing economic efficiency. B) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not. C) Plato Playhouse will earn higher profits if it charges a single price—an average of the two prices— instead of charging two different prices to the two different groups of customers. D) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby improving equity.
By comparing marginal revenue and marginal cost, a firm in a competitive market is able to adjust production to the level that achieves its objective, which we assume to be
a. maximizing total revenue. b. maximizing profit. c. minimizing variable cost. d. minimizing average total cost.
Suppose that a country has an inflation rate of about 2 percent per year and a real GDP growth rate of about 2.5 percent per year. Then the government can have a deficit of about
a. 5 percent of GDP without raising the debt-to-income ratio. b. 4.5 percent of GDP without raising the debt-to-income ratio. c. 1.25 percent of GDP without raising the debt-to-income ratio. d. .5 percent of GDP without raising the debt-to-income ratio.
Contractionary fiscal policy to prevent real GDP from rising above potential real GDP would cause the inflation rate to be ________ and real GDP to be ________
A) lower; lower B) lower; higher C) higher; higher D) higher; lower