In which situation would a monopolist be maximizing profit when it produces at an output where MC < MR?
a. none because when MC < MR, profit is not maximized
b. when the barriers of entry are overcome so that other firms enter
c. when costs keep falling as output increases
d. when price increases as output increases
e. when economic profit is greater than normal profit
A
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If we observe both an increase in the price of flour and in the number of units sold, this could be explained by: a. an increase in the demand for flour. b. a decrease in the demand for flour. c. a decrease in the supply of flour
d. an increase in the supply of flour.
The monetarists believed that
A. the way to fight recessions was by means of fiscal policy. B. the quantity theory of money has a great deal of validity. C. recessions generally come about because the Federal Reserve is not allowing the money supply to grow fast enough. D. the money supply should be allowed to grow at least 8 percent a year.
Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 3?
A. $21.2 billion B. $20 billion C. $20.4 billion D. $20.8 billion
Which of the following is a type of command-and-control regulation?
A. A law requiring consumers of electronics to pay a tax according to the amount of toxic heavy metals in each item purchased B. A law setting the maximum allowable amount of sulfur dioxide (SO2) in a certain district, and auctioning off permits totaling the allowable tons of SO2 C. A law requiring coke ovens to be built in a certain way so as to restrict the amount of pollution they emit D. A law taxing users of fuels according to the carbon content in the fuel