A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profits or minimize losses, the firm should:
A. Continue producing 1,000 units
B. Continue production, but produce less than 1,000 units
C. Increase production to more than 1,000 units
D. Shut down
A. Continue producing 1,000 units
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According to the Keynesian approach, an increase in taxes
A) will not impact consumption, as most consumption is autonomous. B) will reduce consumption by an amount less than the change in taxes. C) will increase consumption, as the government will spend the extra tax revenue and that increases consumption. D) will reduce consumption exactly by the amount of the taxes.
During its run on Broadway, the play The Producers regularly sold out all available tickets at the St. James Theater. The theater could have raised ticket prices from $75 to $125 and still sold all available tickets but chose not to do so
The best explanation for this decision is A) theater owners do not want to raise their prices on weekends, when demand is high, and then have to lower prices during the week, when demand is lower. B) firms sometimes give up profits in the short run to keep their customers happy and increase their profits in the long run. C) theater owners are unaware of the elasticity of demand for Broadway shows. D) theater owners are not motivated to maximize their profits.
If wealth increases, the demand for stocks ________ and that of long-term bonds ________, everything else held constant
A) increases; increases B) increases; decreases C) decreases; decreases D) decreases; increases
To identify the product market, antitrust agencies use
A) qualitative, but not quantitative tools. B) both qualitative and quantitative tools. C) quantitative, but not qualitative tools. D) territorial restrictions