The demand curve and marginal revenue curve for red rubber balls are given as follows:
Q = 16 - P MR = 16 - 2Q
What level of output maximizes profit?
A) 0
B) 4
C) 5.5
D) 6
E) B, C and D all maximize profit.
D
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Which of the following leads to a decrease in real GDP?
A) an increase in interest rates B) an increase in government spending C) an increase in the inflation rate in other countries, relative to the inflation in the United States D) Households have increasingly optimistic expectations about future income.
Under a favorable business environment and if the economic outlook of the future looked promising ________
A) firms might spend more for any given inflation rate B) planned investment might increase leading to a higher equilibrium level of output C) the aggregate demand curve would likely shift to the right D) all of the above E) none of the above
When supply and demand for a product decrease simultaneously, we
A) can predict that both equilibrium price and quantity will increase. B) can predict that both equilibrium price and quantity will decrease. C) cannot predict equilibrium price, but know that equilibrium quantity will decrease. D) cannot predict the change in either the equilibrium quantity or equilibrium price.
Refer to the information provided in Figure 15.2 below to answer the question(s) that follow. 
Figure 15.2 Refer to Figure 15.2. The ________ quantity of perms for We Do Hair, a monopolistically competitive firm, is 40.
A. profit-maximizing B. loss-minimizing C. shut down D. break-even