If a monopolist sets her output such that marginal revenue, marginal cost and average total cost are equal, economic profit must be:
A) negative.
B) positive.
C) zero.
D) indeterminate from the given information.
B
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The equilibrium quantity will decrease and the price might rise, fall, or stay the same when the
A) demand and the supply of a good both increase. B) demand for a good increases and the supply of it decreases. C) demand for a good decreases and the supply of it increases. D) demand and the supply of a good both decrease.
Suppose that the interest rate paid to savers increases. As a result, Tom wishes to save more. This suggests that, for Tom,
A) the substitution effect is greater than the income effect. B) the income effect is greater than the substitution effect. C) utility maximization is not occurring. D) future consumption is a luxury.
The firm in a perfectly competitive industry is a
A) price taker. B) price maker. C) price seeker. D) price dealer.
Which of the following is necessarily true when an economy is in long-run equilibrium?
a. Prices will be constant (that is, inflation will be zero). b. The actual output will be less than the full-employment (or potential) output. c. The actual rate of unemployment equals the natural rate of unemployment. d. The output of the economy will be greater than the full-employment output.