Answer the following statements true (T) or false (F)
1) If your firm has a random demand, producing at the level that maximizes your expected profit will earn the same profit as the profit-maximizing production level with a known demand.
2) If a firm's demand is random, the firm's price and profit are also random.
3) If a perfectly competitive firm has a random demand and known marginal cost, producing at a level that sets expected price equal to marginal cost minimizes the reduction in expected profit.
4) If a firm's demand is known, but has random costs, it cannot maximize its actual profit.
5) When both demand and cost are random, firms cannot maximize expected profit.
1) FALSE
2) TRUE
3) TRUE
4) TRUE
5) FALSE
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If Bob is taxed for each soda he buys, he faces a direct tax.
Answer the following statement true (T) or false (F)
Using Figure 1 above, if the aggregate demand curve shifts from AD2 to AD3 the result in the long run would be:
A. P2 and Y2. B. P1 and Y2. C. P4 and Y2. D. P1 and Y1.
Government expenditures as a share of the U.S. economy are:
A. the largest in the world. B. the smallest in the world. C. smaller than most Western European countries. D. larger than Canada, France, and the United Kingdom but slightly smaller than Germany and Italy.
Productive efficiency is achieved when
A) firms add a low profit margin to the goods and services they produce. B) firms produce the goods and services that consumers value most. C) firms produce goods and services at the lowest cost. D) there are no shortages or surpluses in the market.