A perfectly competitive firm produces 3,000 units of a good at a total cost of $36,000. The fixed cost of production is $20,000. The price of each good is $10. Should the firm continue to produce in the short run?
A) Yes, it should continue to produce because its price exceeds its average fixed cost.
B) No, it should shut down because it is making a loss.
C) Yes, it should continue to produce because it is minimizing its loss.
D) There is insufficient information to answer the question.
C
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The smaller the slope of the aggregate planned expenditure (AE) curve, the
A) larger are imports. B) smaller the multiplier. C) larger the multiplier. D) larger are exports. E) larger is the marginal tax rate.
A perfectly competitive firm is producing at the point where its marginal cost equals its marginal revenue. If the firm boosts its output, its total revenue will ________ and its profit will ________
A) rise; rise B) rise; fall C) fall; rise D) fall; fall
According to the Keynesian model of the money market, the supply of money
a. depends on the interest rate. b. is chosen by the central bank. c. varies with the price level. d. varies with income.
If your money income stays the same but the price of one good that you are buying goes up, your effective purchasing power
A. falls. B. does not change. C. cannot be determined. D. rises.