Which of the following correctly describes the profit-maximizing level of output selected by a monopolistically competitive firm in the short run?
a. Output is set in the short run where marginal cost equals price.
b. Output is set in the short run where marginal cost equals marginal revenue.
c. Firms will shut down in the short run even if price exceeds average variable cost at the rate of output selected by the firm.
d. Firms will shut down in the short run even if price equals marginal cost.
b
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From 1992-2007, the volume of currency traded worldwide:
a. slumped due to the world recession. b. increased approximately 290%. c. fluctuated wildly due to investor expectations. d. was concentrated in trades in the developing world.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.
A perfectly competitive industry is in long-run equilibrium. If demand for the product increases, we can expect the price of the good to:
A. rise at first and then fall. B. fall at first and then rise. C. rise and remain at the higher price. D. fall and remain at the lower price.
Table 7.1GDP Nominal GDP(in billions of dollars)GDP deflatorCPI2002S6,992.4106.2151.620037,431.6109.1153.820047,843.2112.3157.8Based on Table 7.1, the rate of inflation between 2003 and 2004, using the GDP deflator, was
A. 4.1 percent. B. 6.2 percent. C. 2.4 percent. D. 2.9 percent.