It definitely pays a firm to shut down if the price of its product is
A) below its minimum average variable cost.
B) above its maximum variable cost.
C) above its minimum average variable cost.
D) below its minimum total cost
Answer: A) below its minimum average variable cost.
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The inflation rate measures the percentage increase in the price level from one year to the next
Indicate whether the statement is true or false
The "Fisher Effect" occurs when a one-percentage-point rise in expected inflation ________ interest rate by one percentage point
A) raises the expected real B) lowers the expected real C) raises the nominal D) lowers the nominal
Which of the following is a plausible explanation for a downward shift in the consumption function?
A) A decline in home values B) A decline in wages C) A decrease in the personal income tax rate D) A rise in wages
When a perfectly competitive firm experiences positive economic profits
A) the high barriers to entry prevent further competition. B) existing firms exit the industry. C) additional firms enter the industry. D) firms have no incentive to exit or enter the industry.