A firm holds a pure monopoly in the market and can sell 4 units of output at $2.00 per unit and 5 units of output at $1.75 per unit. The firm will produce and sell the fifth unit if its marginal cost is which of the following?
a. $1.75 or less
b. $2.00 or less
c. $0.75 or less
d. $1.00 or less
c. $0.75 or less
The firm will produce and sell the fifth unit if its marginal cost is $0.75 or less.
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Assuming that MPC is .75, equal increases in government spending and tax collections by $10 billion will
A. increase the equilibrium real GDP by $10 billion. B. reduce the equilibrium real GDP by $10 billion. C. increase the equilibrium real GDP by $2.5 billion. D. leave the equilibrium real GDP unchanged.
Until 1950, the Social Security program spent ______ of its assets every year
a. less than 10 percent b. between 10 and 20 percent c. between 20 and 30 percent d. over 30 percent
Suppose European incomes increase by 4 percent per year, and as a result, U.S. exports of farm goods to Europe rise by less than 4 percent annually. The elasticity that can be computed from this information is the
A. Price elasticity of supply. B. Income elasticity of demand for U.S. farm exports. C. Cross-price elasticity of demand for income with respect to U.S. farm goods. D. Price elasticity of demand.
Market failures
A. prevent the price system from attaining economic efficiency. B. encourage businesses to produce more of a good than they really want to. C. encourage people to purchase more of a good than they really want. D. are usually caused by government interference in the economy.