If a firm decides to make the investment decision to expand its capacity, then it must have discovered that
A. P = AVC.
B. P = ATC.
C. P > ATC.
D. P > AVC.
Answer: C
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The Taylor rule predicted a federal funds rate which was ________ that set when Paul Volcker was chairman of the Fed, and a rate which was ________ that set when Arthur Burns chaired the Fed
A) less than; equal to B) greater than; less than C) greater than; equal to D) less than; greater than
If firms anticipate that they are at risk of being held up, firms are more likely to adopt contracts or organizational forms such as
a. investments in reputation b. mergers c. exchange of "hostages" d. All the above
The goal of stabilization policy is to stabilize aggregate _____. As a result, stabilization policy will also stabilize _____ and _____
Fill in the blank(s) with correct word
A slump in one industry could increase the relative attractiveness of another industry:
A. increasing the quantity of labor demanded in the latter. B. increasing the quantity of labor supplied in the latter. C. decreasing the quantity of labor supplied in the latter. D. decreasing the quantity of labor demanded in the latter.