If the price of a product is $12, its average total cost is $2 and its average total cost is $15 at the profit-maximizing output level, in the short run the firm:
A. should expand output until MR = MC.
B. cannot cover total fixed costs.
C. experiences a loss.
D. must always shut down.
Answer: C
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An equilibrium in game theory in which the players make and share the monopoly profit is called
A) the Nash equilibrium. B) the cooperative equilibrium. C) a contestable market equilibrium. D) limit pricing.
John's utility of wealth curve is shown in the above figure. He currently has wealth of $20,000, and there is a 25 percent chance that he could lose it all. If an insurance company offers to insure against this loss for $6,000, John will
A) buy the policy. B) not buy the policy. C) be indifferent between being insured and uninsured. D) There is not enough information to answer.
A rising rate of inflation: a. makes people more willing to hold money as an asset
b. reduces the usefulness of money as a store of value and thus increases the velocity of money. c. increases the usefulness of money as a medium of exchange and thus reduces the velocity of money. d. is usually preceded by a reduction in the money supply. e. does not have any effect on the velocity of money.
A firm manager is an agent hired by the:
A. owner to control the production process. B. workers to control the production process. C. owner to oversee the workers. D. workers to consult with the owner.