Answer the following statement true (T) or false (F)
1) Other things equal, the shorter the loan period and the larger the loan size, the higher is the
interest rate charged by the lender.
2) The supply of loanable funds is perfectly elastic.
3) Economic profits are the salaries received by the hired managers of business corporations.
4) The basic function of profits and losses is to allocate society's scarce resources to their
highest valued uses.
5) Broadly defined, labor's share of national income has been remarkably stable since 1900.
1) F
2) F
3) F
4) T
5) T
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Which of the following is TRUE about a firm in monopolistic competition in the long run?
A) P = MC B) P = MR C) ATC = MC D) P = ATC E) MC = ATC
Based on Table 3.1, if the world price of computers is four pairs of shoes, then the optimal strategy for each country would be
A) to specialize in shoes. B) to specialize in computers. C) for Mexico to specialize in shoes, and the United States in computers. D) for the United States to specialize in shoes, and Mexico in computers. E) None of the above.
Assume that a firm's marginal revenue just barely exceeds marginal cost. Under these conditions the firm should:
a. expand output. b. contract output. c. maintain output. d. There is insufficient information to answer the question.
A perfectly competitive firm decides to shut down if:
a. the price falls below the average-total-cost. b. average revenue falls below the average-variable-cost. c. the price falls below the marginal cost. d. the average revenue curve lies below the marginal cost curve. e. the total revenue is less than total cost.