As long as price exceeds AVC, the firm is better off
A. raising its price.
B. closing.
C. cutting price.
D. continuing production.
Answer: D
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Analysis indicates that the economy is in a recessionary gap. Which of the following is the least appropriate policy mix in this situation?
a. a budget surplus and expansionary monetary policy b. a budget deficit and expansionary monetary policy c. a budget deficit and contractionary monetary policy d. a budget surplus and contractionary monetary policy
When supply is fixed or the product is unique, then price is
A. supply determined. B. government determined. C. demand determined. D. indeterminate.
The best explanation for the shape of a short run marginal cost schedule is
A. there is no fixed factor of production. B. increasing returns to scale. C. decreasing returns to scale. D. a fixed factor causes diminishing returns to other factors.
The transactions demand for money is least likely to be a function of the:
A. Price level B. Interest rate C. Level of national income D. Frequency of wage and salary payments