If a monopolist is producing at an output rate at which P = ATC, then
A) its economic profit will be zero.
B) its economic profit will be positive.
C) it is maximizing its profits.
D) it is minimizing its losses.
Answer: A
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When the price of oranges increases from $4 to $6 per bag, the quantity demanded of oranges decreases from 800 bags to 700 bags. The price elasticity of demand over this price range is equal to
A) 3. B) 3/7 or 0.4286. C) 1/3 or 0.3333. D) 1/4 or 0.25.
Which of the following belongs to the government regulation to control pollution?
A) emissions standard B) emissions fee C) effluent charge D) All of the above
Firms in perfect competition will leave the industry if they
a. suffer short-run losses b. suffer losses, even if they are covering variable costs in the short run c. suffer long-run losses d. earn a normal profit e. earn a zero economic profit
The table above gives GDP and expenditures for an economy with no international trade and with lump-sum taxes. All the numbers are billions of dollars. C is consumption expenditure, I is investment, and G is government purchases. If the government decides to increase its purchases by an additional $450 billion, equilibrium GDP increases to
A) $7,250 billion. B) $10,450 billion. C) $5,450 billion. D) $7,450 billion.