According to the graph shown, if a firm is producing at Q1:
This graph represents the cost and revenue curves of a firm in a perfectly competitive market.
A. profits are being maximized.
B. average total costs exceed the market price.
C. the firm should not increase production because it will earn loss.
D. marginal revenue is greater than average total cost.
B. average total costs exceed the market price.
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If aggregate output is falling, _____
a. federal budget deficit decreases b. tax revenue increases c. automatic stabilizers will tend to increase the size of the deficit d. automatic stabilizers will tend to decrease the size of the deficit e. transfer payments decrease as fewer people become eligible for public assistance
Entry barriers can lead to long-run economic profits
a. True b. False Indicate whether the statement is true or false
The best example of a positive externality is:
A. alcoholic beverages. B. roller coaster rides. C. education. D. pollution.
Which of the following does not illustrate the free rider problem?
A. Frank enjoys the fireworks from his lawn and does not purchase a ticket to view the display from the stadium. B. Amy does not contribute to public television, but she watches it every day. C. Roger refuses to help pay for the private security officer who patrols his neighborhood. D. Amanda, a taxpayer, prefers to check out books from her local library rather than purchasing them herself.