What price should a firm charge for a package of five ties given a marginal cost of $5 and an inverse demand function P = 10 ? Q by the representative consumer?
A. $50
B. $12.50
C. $37.50
D. $25
Answer: C
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The aggregate demand curve is downward sloping for all of the following reasons EXCEPT for the:
A. effect of inflation on the value of money. B. impact of inflation on the consumer price index (CPI). C. response of the Fed to inflation through its policy reaction function. D. distributional impact of inflation on spending.
Starting from long-run equilibrium, a large tax increase will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. recessionary; lower; potential B. expansionary; lower; potential C. expansionary; higher; potential D. recessionary; lower; lower
Which of the following describes a situation in which demand must be elastic?
A. Total revenue increases by 15 percent when the price of corn dogs rises by 15 percent. B. Total revenue increases by less than 15 percent when the price of corn dogs rises by 15 percent. C. Total revenue decreases by more than 15 percent when the price of corn dogs rises by 15 percent. D. Total revenue increases by $15 when the price of corn dogs rises by $15.
An industry with a concentration ratio of 60 would have at least ____ firms.
A. 2 B. 4 C. 5 D. 7