Which markets are depicted in the basic circular flow model?
A) the factor market and the bond market
B) the stock market and the bond market
C) the money market and the foreign exchange market
D) the goods market and the stock market
E) the goods market and the factor market
E
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If a perfectly competitive firm produces an output level at which price is less than marginal costs, then the firm should:
A. reduce output to earn greater profits or smaller losses. B. leave its output level unchanged provided it is covering its variable cost. C. expand output to earn greater profits or smaller losses. D. raise its price.
A critical assumption in the classical model is that markets are always clear
a. True b. False
As a resource becomes more scarce, we expect its price to
a. rise. b. fall. c. remain constant. d. fluctuate wildly.
A competitive firm's profit will be increasing as long as marginal revenue is greater than marginal cost
a. True b. False Indicate whether the statement is true or false