Suppose that when a perfectly competitive firm produces 500 units of output a day, it earns an economic loss. If the price of each unit of output is $1.50, then, in the short run, it's clear that this firm:
A. is not maximizing its profit.
B. should shut down.
C. should produce more than 500 units a day.
D. should not shut down if its total variable cost is less than $750.
Answer: D
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Which is the most accurate statement?
A. The poverty of older Americans is much greater than the problem of child poverty. B. Public assistance has been considered a great success. C. Medicare and Medicaid date back to the New Deal of the 1930s. D. Less than half of those eligible receive food stamps.
Private property rights are
A. a social cost. B. an externality. C. exclusive rights of ownership. D. property that is owned by everyone and therefore by no one.
Discretionary Fiscal Policy differs from Nondiscretionary Fiscal Policy in that
A. the former deals with government spending, and the latter deals with tax policy. B. the former is chosen by Congress, while the latter is chosen by the President. C. the former often takes years to enact, while the latter takes effect automatically. D. the former is always stabilizing, while the latter is never stabilizing.
Assume a society can produce either olives or grapes. If the marginal rate of transformation of bushels of olives into bushels of grapes is 0.2, then the opportunity cost of olives is
A. the 5 bushels of olives that must be forgone. B. the additional 0.2 gallons of olives that can be produced. C. the 0.2 bushels of olives that must be forgone. D. the 5 bushels of grapes that must be forgone.