In monopolistic competition, why would a firm avoid increasing output to lower its average total cost?
a. Marginal revenue would increase above the total cost of the increased output.
b. Marginal revenue would fall below the total cost of the total output.
c. Total revenue would increase above total cost for the total output.
d. Marginal revenue would fall below the marginal cost of the increased output.
d. Marginal revenue would fall below the marginal cost of the increased output.
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Emotions like guilt and sympathy:
A. are irrelevant to economic decision-making. B. can solve commitment problems, but generally reduce players' payoffs. C. can solve commitment problems. D. reduce the likelihood that a transaction will maximize total economic surplus.
The GDP figures fail to count labor services and other household production. Once this omission is taken into account,
What will be an ideal response?
If the opportunity costs of producing a good increase as more of that good is produced, the economy's production possibility frontier will be
A. a negatively sloped straight line. B. negatively sloped and "bowed inward" toward the origin. C. negatively sloped and "bowed outward" from the origin. D. a positively sloped straight line.
The strongest argument for an independent Federal Reserve rests on the view that subjecting the Fed to more political pressures would impart
A) an inflationary bias to monetary policy. B) a deflationary bias to monetary policy. C) a disinflationary bias to monetary policy. D) a countercyclical bias to monetary policy.