Under rate-of-return regulation, the price is set so that
A. the firm earns a normal rate of return on investment.
B. price equals the marginal cost of production.
C. the firm earns a monopoly profit.
D. the firm earns a positive economic profit.
Answer: A
You might also like to view...
Starting from long-run equilibrium, a decrease in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. higher; potential D. lower; higher
If the Federal Reserve chooses to fight high inflation with contractionary monetary policy and firms and consumers expect this policy to reduce inflation, which of the following would you expect to see?
A) a downward shift of the short-run Phillips curve B) a decrease in the long-run aggregate supply curve C) an increase in inflationary expectations D) a reduction in the unemployment rate
Suppose Campus Books, a profit-maximizing firm, is the only supplier of the textbook for a given class. The marginal cost of supplying each book is constant and equal to $10, and Campus Books has no fixed costs. The table shows the reservation prices of the eight students enrolled in the class. CustomerReservation Price($/Book)Q60R54S48T42U36V30W24X18What is the socially optimal number of books?
A. 6 B. 8 C. 7 D. 5
If no other national income variables change when ________ increase, then GDP will decrease.
A. investments B. imports C. amounts of solid waste D. inventories