Good Grapes is selling grapes in a purely competitive market. Its output is 5000 pounds, which it sells for $5 a pound. At the 5000-pound level of output, the average variable cost is $4.00, the marginal cost is $4.25, and the average total cost is
$4.50 a pound. Should the firm increase output, decrease output, or not produce? Why? How should the firm determine the optimal level of output?
What will be an ideal response?
The firm should produce because at the 5000-pound level of output, marginal revenue or price is greater than average variable cost. The firm also should increase output because marginal revenue or price is greater than marginal cost. Output should increase to the point where marginal revenue equals marginal cost and profit is maximized.
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The sum of past federal budget deficits increases the:
a. GDP debt. b. trade debt plus debt. c. national debt. d. Congressional debt.
If the Fed wishes to reduce inflation then it should
a. increase the discount rate. b. decrease reserve requirements. c. buy government securities on the open market. d. Do any of the above.
Suppose the U.S. and Japan both produce airplanes and televisions and the U.S. has a comparative advantage in the production of airplanes while Japan has a comparative advantage in the production of televisions. If the U.S. exports airplanes to Japan and imports televisions from Japan,
a. both countries, as a whole, will be better off. b. all individuals in both countries will be better off. c. both countries, as a whole, will be worse off. d. all individuals in both countries will be worse off.
During the Chinese experience with pegging the yuan to the dollar, the yuan was ________. As a result, there was a ________ of dollars on the market, and the Chinese government had to purchase dollars to maintain the peg
A) undervalued; shortage B) undervalued; surplus C) overvalued; shortage D) overvalued; surplus