A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $4, and MR = $3. We can conclude that
A) economic profit could be increased by producing more.
B) economic profit could be increased by producing less.
C) economic profit cannot be increased.
D) the firm is earning $10 in economic profits.
B
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Describe how the real interest rate changes in a Keynesian model if a shock shifts the IS curve down and to the right and the Fed changes its policy to keep output unchanged
What will be an ideal response?
If production of an item results in negative external costs, then
A) the market price is below the socially preferred price that reflects the external costs. B) the market price is above the socially preferred price that reflects the external costs. C) market forces will always correct the problem. D) the market quantity is too low from society's point of view.
Suppose that a perfect-maximizing monopolist operates with a horizontal marginal cost curve and no fixed costs. Which of the following would NOT be represented as part of the area between its demand curve and marginal cost curve?
A) total costs B) economic profits C) consumer surplus D) deadweight loss
Economists also refer to the normal rate of return on investment as
A. the equity kicker. B. a residual cost. C. the fixed cost of entrepreneurship. D. the opportunity cost of capital.