Maxine's Cookie Shop sells chocolate chip cookies in a perfectly competitive market for $2 per dozen. Maxine currently produces 200 dozen cookies per day and average total cost at this level of production is $1.75
What level of profit is this firm earning? Explain.
Maxine's Cookie Shop is earning profits of $50 per day. This can be calculated by taking total revenue ($2 x 200 = $400) and subtracting total cost ($1.75 x 200 = $350).
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Which monetary policy rule needs a stable demand for money to work well?
A) inflation targeting rule B) nominal GDP targeting rule C) k-percent rule D) discretionary monetary policy E) monetary base instrument rule
Government often finds it difficult to cope with externalities because
a. costs and benefits are difficult to assess in monetary terms. b. taxes and subsidies are ineffective in equating MSC and MSB. c. government has no authority to impose fines for air and water pollution. d. marginal private cost curves cannot be shifted.
Americans generally pay
a. a lower percentage of their incomes in taxes than citizens of other industrialized countries. b. a lower percentage of their incomes in taxes than citizens of other industrialized countries, with the exceptions of Sweden and the Netherlands. c. about the same percentage of their incomes in taxes as citizens of other industrialized countries. d. a higher percentage of their incomes in taxes than citizens of other industrialized countries.
A dramatic and sustained increase in oil prices would most likely:
A. increase demand-pull inflation. B. decrease demand-pull inflation. C. increase cost-push inflation. D. decrease cost-push inflation.