For a perfectly competitive firm, profit maximization occurs when
A) marginal revenue equals average total cost.
B) marginal revenue equals marginal cost.
C) marginal cost is equal to average total cost.
D) average total cost is at its minimum.
Answer: B
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Given a required reserve ratio of 20 percent, a commercial bank that has received a new deposit of $100 can make additional loans of
A) $400. B) $0. C) $20. D) $80.
Rationality implies that in order to get what they want, people will spend the most time and effort
a. making private market decisions b. getting politically involved c. investigating political candidates' platforms d. debating social issues e. writing to Congress
If an economy is at its potential output level, which of the following is not true?
a. The economy is at its full-employment output level. b. Unemployment is at the natural level. c. The price level is zero. d. The output level being produced can be sustained indefinitely given the economy's resources and technology. e. The only unemployment is frictional or structural.
Which of the following will cause a decrease in consumer surplus?
a. an increase in the number of sellers of the good b. a decrease in the production cost of the good c. sellers expect the price of the good to be lower next month d. the imposition of a binding price floor in the market