A perfectly competitive firm ________ at the level of output where P = ATC.
A. breaks even
B. earns an economic profit
C. suffers an economic loss
D. shuts down
Answer: A
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If interest rates rise and still real investment spending increases, what must have happened to the function relating investment to the interest rate?
Tyrell has $50 per week to spend on good A, which has a price of $5, and good B, which has a price of $4 . He buys six units of A and five of B. The marginal utility of the sixth unit of A is 25, and the marginal utility of the fifth unit of B is 20 . Which of the following is true?
a. He is maximizing his utility. b. We cannot tell if he is maximizing his utility unless we know his total utility. c. He is not maximizing his utility and should buy more of A. d. He is not maximizing his utility and should buy more of B. e. He is not maximizing his utility because he is not spending all of his income.
Fundamentally, economics deals with
a. scarcity. b. money. c. poverty. d. banking.
The economic surplus of an action is:
A. the difference between the explicit and implicit costs of taking an action. B. the money a person has left over after taking an action. C. the difference between the benefit and the cost of taking an action. D. the benefit gained by taking an action.