Use the information in the following table to answer the next question.(1) Interest Rate(2) Investment (billions of dollars)(3) Investment (billions of dollars)4%$100$8059070680607705086040In the table, investment is in billions. Suppose the Fed reduces the interest rate from 6% to 5% at a time when the investment demand declines from that shown by column (2) to that shown by column (3). As a result of these two occurrences, investment will ________.
A. increase by $20 billion
B. increase by $10 billion
C. decrease by $20 billion
D. decrease by $10 billion
Answer: D
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A perfectly competitive firm is producing at the quantity where marginal cost is $6 and average total cost is $4. The price of the good is $5. To maximize its profit, this firm should
A) raise its price. B) lower its price. C) increase its output. D) decrease its output. E) increase the price it charges for its product.
The entry of China and other developing countries into the global economy ________ the value of marginal product of factory workers in the United States and ________ their wage rate
A) increases; lowers B) decreases; raises C) decreases; lowers D) increases; raises
By focusing the customers on the price of a product, you make
a. The demand for the product more inelastic b. The customers less price sensitive to the product c. Both A & B d. None of the above
For a perfectly competitive firm,
a. P = AR at all levels of output b. P = AR at the profit-maximizing quantity only c. P > AR at all levels of output d. P < AR at the profit-maximizing quantity only e. P < AR at all levels of output