the solutions to the principal-agent problem ensures that the firm is operating
What will be an ideal response?
on the production function
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Expansionary fiscal policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.
Which of the following is a TRUE statement about a monopoly?
A) A monopoly does not necessarily earn positive economic profits. B) A monopoly must earn an above-normal profit to stay in business. C) As long as there are barriers to entry, a monopoly can always find some price-output combination that generates positive economic profits. D) As long as the demand curve slopes down, a monopoly can always find some price-output combination that generates positive economic profits.
Moving downward on a downward sloping linear demand curve, the absolute value of the price elasticity of demand
A. is constant. B. decreases continuously. C. may either increase or decrease. D. increases continuously.
Price increases will ________ a household's choice set.
A. not change B. decrease C. increase D. sometimes increase and other times decrease