Suppose your firm is operating in a perfectly competitive market, and that the minimum average variable cost of producing your good is $13. If the price of the good is $15, your firm should:
A. supply the amount of the good where the marginal cost of production is equal to $15.
B. not produce anything since the price is above the minimum of average variable cost.
C. not consider price when determining the amount to sell.
D. not do any of these.
Answer: A
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The reason that it is possible for the economy in the above figure to be at equilibrium point E2 rather than at equilibrium point E1 is that
A) in the long run there is always less than full employment. B) in the short run the economy can produce more than it can in a long-run situation. C) AD always shifts rightward and never shifts leftward. D) the economy must be in a recession.
Refer to Table 11.1. What is the value of GDP?
A) $7,450. B) $7,250. C) $7,150. D) $7,350.
Tax smoothing is intended to ________
A) reduce income inequality B) avoid fluctuations in the ratio of the government deficit to GDP C) shift the burden from current taxpayers onto future generations D) keep the tax wedge from shrinking
The quantity of reserves demanded decreases as the federal funds rate rises because
a. people want more liquid assets as the federal funds rate rises. b. the price of bonds rise as the federal funds rate rises. c. the opportunity cost of holding excess reserves increases as the federal funds rate rises. d. people want more money to invest as the federal funds rate rises.