Competitive firms that earn a loss in the short run should
a. shut down if P < AVC.
b. raise their price.
c. lower their output.
d. All of the above are correct.
a
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Luigi is willing to lend Klaus $5,000 for one year at a nominal rate of interest of 7%. Both Luigi and Klaus expect the rate of inflation to be 2% in the next year. How much additional purchasing power will Luigi have in one year?
A. $350 B. $5,350 C. $5,250 D. $250
Suppose the city of Chicago imposes a rent control program that fixes rents at $400 below the equilibrium rent. With this plan
A) the quantity of apartments demanded will increase. B) the quantity of apartments supplied will increase. C) young people and poor people will have an easier time finding apartments. D) the deadweight loss in Chicago's apartment market will be eliminated. E) there will be a surplus of apartments offered for rent.
A firm's marginal cost is $82, its average total cost is $50, and its output is 800 units. Its total cost of producing 801 units is
A) less than $40,000. B) between $40,000 and $40,050. C) between $40,050 and $40,080. D) greater than $40,080.
Changes in interest rates affect all four components of aggregate demand
Indicate whether the statement is true or false