Exhibit 7-10 Price and cost data for a firm
Q
P
AVC
ATC
MC
0
$12
?
?
?
1
12
3
5
5
2
12
5
6
7
3
12
7.3
8
12
4
12
9.5
10
16
In Exhibit 7-10, following the rule regarding MR and MC, the most profitable output level is:
A. 1.
B. 2.
C. 3.
D. 4.
Answer: C
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The average benefit of n units of an activity is the:
A. n divided by the total benefit of n units. B. n times the total benefit of n units. C. extra benefit from carrying out one additional unit of the activity. D. total benefit of n units divided by n.
If the nominal interest rate is 5 percent and the rate of inflation is 9 percent, then the real interest rate is
a. -4 percent. b. -0.44 percent. c. 4 percent. d. 14 percent.
If the government cuts the tax rate, workers get to keep
a. less of each additional dollar they earn, so work effort increases, and aggregate supply shifts right. b. less of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left. c. more of each additional dollar they earn, so work effort increases, and aggregate supply shifts right. d. more of each additional dollar they earn, so work effort decreases, and aggregate supply shifts left.
Refer to the figure below.________ inflation will eventually move the economy pictured in the diagram from short-run equilibrium at point ________ to long-run equilibrium at point ________. 
A. Rising; A B. Falling; A; C C. Falling; B: C D. Rising; A; C