Maximizing profit means finding the maximum difference between:
A. TR and TC.
B. MR and MC.
C. price and ATC.
D. ATC and MC.
Answer: A
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In the above figure, suppose the economy is initially on the demand for money curve MD1. What is the effect of a rise in the nominal interest rate?
A) The demand for money curve would shift rightward to MD2. B) The demand for money curve would shift leftward to MD0. C) There would be a movement upward along the demand for money curve MD1. D) There would be a movement downward along the demand for money curve MD1.
Income supplements large enough to significantly increase the economic status of poor people will
a. encourage behavior that increases the risk of poverty. b. create high implicit marginal tax rates that reduce the incentive of transfer recipients to earn. c. provide low-income recipients with a strong incentive to work and increase their earnings so they will not be dependent on income transfers. d. do both a and b.
Which of the following is NOT consistent with the Permanent Income Hypothesis?
A. The theory would predict that people's consumption would be greater than their income until their mid to late 20s B. A person who won the lottery would spend only a small part of their winnings in the first year C. Consumption is smaller than income when people reach old age D. People gear their consumption to their expected earnings more than to their current income
The government serves as an actor in the economy when it
A. alters anti-trust laws B. increases defense spending C. reduces the minimum wage D. improves health and safety standards for certain industries