A monopolistically competitive firm is producing at a short-run output level where average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. In the short run, the firm should
A. increase product price.
B. make no change in the level of output.
C. increase the level of output.
D. decrease the level of output.
Answer: C
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All else equal, if Canada raises its interest rates,
A) the dollar depreciates. B) the U.S. demand for Canadian dollars increases. C) the Canadian supply of Canadian dollars increases. D) Both A and B. E) Both A and C.
Fractional reserve banking is the system that
A) allows banks not to insure their deposits. B) allows banks not to join the Federal Reserve System. C) limits banks' activities from crossing state lines. D) allows banks to keep smaller reserves than their deposits.
If producers believe that the increase in their relative prices is small relative to the increase in the general price level, then the slope of the short-run aggregate supply curve will be
A) zero. B) small. C) large. D) negative.
A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____
a. marginal returns b. total costs c. marginal costs d. average costs e. average benefits