Efficiency wages, a Keynesian theory of unemployment, posits that wages higher than the equilibrium wage are a cause of unemployment.

If the price exceeds the average variable cost, by producing the level of output such that marginal revenue equals marginal cost, the firm ensures that it will

A) earn an economic profit. B) not suffer any losses. C) earn the largest profit possible. D) survive in the long run.

Regulation of a natural monopoly that forces it to price and produce as if it were a competitive firm results in

A) the market being instantly competitive. B) higher profits for the monopoly. C) economic losses for the monopoly. D) a highly unstable marketplace.

When the Fed lowers the interest rate:

A. investment increases, and net exports decreases. B. both investment and net exports increase. C. both investment and net exports decrease. D. investment decreases, and net exports increase.

Suppose that gasoline prices increase dramatically this month. Lola commutes 100 miles to work each weekday. Over the next few months, Lola drives less on the weekends to try to save money. Within the year, she sells her home and purchases one only 10 miles from her place of employment. These examples illustrate the importance of

a. the availability of substitutes in determining the price elasticity of demand. b. a necessity versus a luxury in determining the price elasticity of demand. c. the definition of a market in determining the price elasticity of demand. d. the time horizon in determining the price elasticity of demand.