Setting price equal to marginal cost in a natural monopoly will lead to
a. excess profits for the firm.
b. losses for the firm.
c. zero profits for the firm.
d. One cannot tell without further information.
b
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The two key objectives of the Fed are:
A) low and predictable levels of inflation, and interest rates above 10%. B) zero inflation, and zero unemployment. C) low and predictable levels of inflation, and maximum levels of employment. D) low and predictable levels of inflation, and zero unemployment.
A marginal cost curve
A) is upward sloping. B) shows that as more of a good is produced, opportunity costs of producing another unit increase. C) is bowed inward so that its slope can become negative. D) Both answers A and B are correct.
Refer to Figure 4.3. All else equal, an increase in net exports accompanied by a decrease in expected future profits would cause which of the following shifts?
A) S1 to S2 and D1 to D2 B) S2 to S1 and D1 to D2 C) S1 to S2 and D2 to D1 D) S2 to S1 and D2 to D1
Suppose consumers anticipate that their wealth will grow over time, because of interest earnings and capital gains. According to the life-cycle hypothesis, such optimism should cause current consumption to be ________
A) relatively low B) relatively insensitive to changes in income C) rising as individuals near retirement age D) relatively high