Assume that a firm is producing an output level such that marginal revenue equals marginal cost. One can correctly conclude that the firm is producing a level of output which is:
a. equal to the profit maximizing level of output.
b. equal to revenue maximizing level of output.
c. less than the profit maximizing level of output.
d. zero.
e. greater than the profit maximizing level of output.
a
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If the demand for money is relatively stable,
A) the velocity of money will be constant. B) the velocity of money will grow at a steady and predictable rate. C) a fixed growth rate for the nominal money supply will lead to a stable growth rate of nominal GDP. D) B and C are both correct.
In labor markets, a change in the wage rate has both an income and a substitution effect. An increase in wages causes an increase in real income but at the same time it increases the relative price of leisure for the worker. If an increase in wage rate causes an individual to work less, _____
a. the income effect dominates the substitution effect b. the substitution effect dominates the income effect c. the substitution and income effects cancel each other out d. then leisure will be referred to as an inferior good e. the increase in wage rates will cause an increase in the supply of labor
Microeconomics is concerned with individual performance as well as the economy as a whole.
Answer the following statement true (T) or false (F)
The economy starts out with a balanced Federal budget. If the government then implements expansionary fiscal policy, then there will be a:
A. Trade deficit B. Trade surplus C. Budget deficit D. Budget surplus