Figure 6.2 shows the cost structure of a firm in a perfectly competitive market. Suppose that market price falls to $6. If the firm produces at an output level that causes it to suffer an economic loss of $120, its average total cost (X) is:
A. $8.
B. $7.50.
C. $6.50.
D. $4.
Answer: B
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Suppose that the money wage in the economy increases by 8 percent. As a result the
A) long-run aggregate supply will decrease. B) long-run and the short-run aggregate supply both decrease. C) short-run aggregate supply will decrease. D) long-run aggregate supply will increase and the short-run aggregate supply will decrease.
The above figure shows the market for anti-freeze. The government imposes the sales tax shown in the figure on sellers. What is the deadweight loss from this tax?
A) $1,500 B) $3,000 C) $4,500 D) $6,000
The Fed's holdings of securities consist primarily of ________, but also in the past have included ________
A) Treasury securities; bankers' acceptances B) municipal securities; bankers' acceptances C) bankers' acceptances; Treasury securities D) Treasury securities; municipal securities
College graduates earn much more than grade school dropouts mainly because
A. the college graduate is older. B. the college graduate has learned more. C. the college graduate is probably smarter, richer, more motivated, has better connections, and comes from a more supportive learning environment. D. the college graduate is more likely to have grown up in a large city, and to be more cosmopolitan.