If price is below average variable costs at all rates of output, the quantity supplied by a perfectly competitive firm will equal
A) zero.
B) the rate of output where price equals marginal cost.
C) the rate of output associated with the break-even point.
D) the rate of output where marginal revenue equals average fixed costs.
A
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Use the figure below to answer the following question.
What area represents consumer surplus after the government imposes the excise tax on the market?
A. square $13ac$9 B. triangle $21a$13 C. triangle abc D. triangle $1c$9
If marginal cost is equal to marginal revenue
A. the firm should expand output. B. the firm should contract output. C. the firm should hold output constant. D. there is no way to determine if the firm should expand output, contract output, or hold output constant.
Demand for a good is inelastic if:
A. the quantity effect outweighs the price effect of a price increase. B. the absolute value of price elasticity is greater than 1. C. total revenue decreases when price decreases. D. None of these is true.
New Keynesians argue that
A. appropriate activist policies will increase the length of cyclical fluctuations. B. appropriate activist policies will have an known effect on the length of cyclical fluctuations. C. appropriate activist policies can reduce cyclical fluctuations. D. none of these.