If the price is greater than the average variable cost, the firm should produce
A. where AVC is minimized.
B. the loss the firm makes from shutting down (its TFC) is greater than the loss they make as a result of producing.
C. where MC=MR.
D. the loss the firm makes from shutting down (its TFC) is less than the loss they make as a result of producing.
Answer: C
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Every economic decision involves a trade-off because of
a. theory. b. opportunism. c. consumption. d. scarcity. e. efficiency.
Refer to the accompanying figure.
Starting from long-run equilibrium at point C, a favorable inflation shock that decreases inflation from ? to ?1 will lead to a short-run equilibrium at point ________ creating ________ gap.
A. B; expansionary B. B; recessionary C. A; a recessionary D. A; an expansionary
For the money expansion process to produce the maximum potential multiplier effect
A. all loans from banks have to be redeposited throughout the banking system. B. the Fed has to sell government bonds to back up the loans. C. all loans of a given bank have to be deposited in that bank. D. the required reserve ratio has to be 100 percent.
Dividing the number seventy-two by an interest rate yields
A. the real interest rate after seventy-two years. B. the Rule of 72. C. the square root of seventy-two. D. the lowest common denominator of seventy-two.