Once a firm has determined the quantity of output it wishes to sell, the maximum price it can charge for each unit is determined by:
A. the demand curve facing the firm.
B. the average cost of making the product.
C. the marginal cost of making the product.
D. the firm's marginal revenue curve.
Answer: A
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In a 2-good model, suppose that all individuals have tastes that are quasilinear in either good 1 or in good 2 (with some of each represented in the group.) The quasilinearity of everyone's tastes is then sufficient to insure that we can treat the group as if it were a single representative consumer.
Answer the following statement true (T) or false (F)
In which of the following situations is expansionary monetary policy most effective?
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