Show how a monopolist maximizes its profit. Explain your graph.
What will be an ideal response?
The student should draw a graph similar to Figure 7-2, indicating where the MR=MC point on the graph is to determine the monopolist’s output, price, ATC of the output, and the profits earned.
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If the nominal interest rate in an economy is 9% and the expected inflation rate is 6%, then the expected real interest rate in the economy is:
A) 15%. B) 3%. C) 6%. D) 9%.
If the demand decreases in a perfectly competitive market, firms will likely:
A. experience negative profits in the short run. B. experience zero profits in the long run. C. exit the market in hopes of capturing profits elsewhere. D. All of these are true.
The long-run average cost curve is the ______ of all of the firm's _____.
A. lower envelope; isocost lines B. level curve; short-run average cost curves C. sum; marginal cost curves D. lower envelope; short-run average cost curves
Assume that the central bank increases the reserve requirement. If the nation has low mobility international capital markets and a flexible exchange rate system, what happens to the GDP Price Index and current international transactions in the context of the Three-Sector-Model?
a. The GDP Price Index falls, and current international transactions become more negative (or less positive). b. The GDP Price Index rises, and current international transactions becomes more negative (or less positive). c. The GDP Price Index and current international transactions remain the same. d. The GDP Price Index rises, and current international transactions remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.