If a firm shuts down in the short run, then
a. total revenue and total cost drop to zero
b. total revenue drops to zero, but the firm must still pay its fixed cost
c. total revenue drops to zero, but the firm must still pay some variable cost
d. total cost drops to zero, but the firm still earns some residual revenues
e. neither total revenue nor total cost drops to zero
B
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When the tax rate is constant when a person's income rises, the tax is a:
a. regressive tax. b. poll tax. c. progressive tax. d. constant tax. e. proportional tax.
A customer of Bank A writes a $20,000 check for a new car, which the car dealer deposits in his bank, Bank B. Which of the following statements pertaining to this transaction is most true?
A. Neither Bank A's nor B's reserves will change B. Banks A's reserves will decrease by the required reserve rate times $20,000 and Banks B's reserves will increase by (1- required reserve rate) times $20,000 C. Bank B's reserves will decrease and Bank A's reserves will increase by $20,000 D. Bank A's reserves decrease by $20,000 and Bank B's reserves increase by $20,000
Critics of stabilization policy argue that
a. "animal spirits" must be offset by active monetary policy. b. active monetary policy is necessary for steady economic growth. c. the lag problem ends up being a cause of economic fluctuations. d. active fiscal policy is required for steady economic growth.
Which of the following is an example of supply-side policy?
A. Tax incentives for business investment. B. Selling bonds in the open market. C. The purchase of military goods by the government. D. Changes in the reserve requirement.