If average total cost > average variable cost > price, a profit maximizing firm in a perfectly competitive market should:
A. continue to produce its current output level.
B. shut down in the short run.
C. increase its output level to minimize its loss.
D. None of these
Answer: B
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Which of the following statistics is the best single measure of overall economic activity?
A) The labor force participation rate. B) The inflation rate. C) GDP. D) The trade surplus.
If the price of a good increases by 10 percent, its quantity demanded drops by 50 percent. The price elasticity of demand is:
A. 1.0 B. 0.2 C. 5.0 D. 2.0
Those who believe that market prices always incorporate all available information believe:
A. in the efficient-market hypothesis. B. that randomly choosing a stock is not as effective as technical or fundamental analysis. C. that current stock prices does not represent true value as correctly as is possible. D. All of these are true.
An excess demand in a market implies that
a. the amount demanded is less than the amount supplied b. price is greater than the equilibrium price c. a shortage of the good exists d. a surplus of the good exists e. the government must implement a price ceiling