If a monopolist is forced to set price equal to average total cost, economic profit
a. will be negative, and the monopolist may go out of business
b. will be zero
c. will be positive
d. will be negative, and the firm will stay in business if there are significant fixed costs
e. may be positive, negative, or zero
B
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Use the following diagram of the market for money to answer the next question.
The equilibrium interest rate is
A. I1. B. I2. C. I3. D. not determinable without additional information.
A-1 bank initially has no excess reserves. If the desired reserve ratio is 10 percent and a new deposit of $10,000 is made in A-1, then A-1
A) can immediately loan $9,000. B) is required to hold the deposit in its reserves. C) can immediately loan $100,000. D) can immediately loan a multiple of the $10,000. E) can immediately loan $10,000.
Okun's Law states that
A) there is a relationship between the unemployment rate, real GDP, and potential GDP. B) supply creates its own demand. C) as the unemployment rate rises, the inflation rate falls. D) a higher inflation rate leads to a higher nominal interest rate. E) as the real wage rate falls, the quantity of labor demanded increases.
Game theory is an especially useful model for analysis in the following types of markets:
a. perfect competition. b. monopolistic competition. c. oligopoly. d. monopoly.