In a fractional-reserve banking system the reserve/deposit ratio equals:
A. less than 100 percent.
B. 100 percent.
C. currency held by the public divided by deposits.
D. more than 100 percent.
Answer: A
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Why do firms ignore external costs when they pollute?
What will be an ideal response?
Variable inputs are defined as any resource that:
A. varies with the size of the firm's plant. B. cannot be changed as output changes. C. can be changed as output changes. D. can be increased or decreased hourly.
A perfectly competitive firm faces a market clearing price of $150 per unit. Average variable costs are at the minimum value of $200 per unit at an output rate of 100 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be
concluded that the short-run profit-maximizing output rate is A) 75 units, at which the firm earns zero economic profits per unit sold. B) 75 units, at which the firm earns $50 in economic profits per unit sold. C) 100 units, because marginal cost equals average variable costs. D) 0 units, because price is less than average variable costs.
The above figure shows the demand curves in four different markets. If each of the markets has an identical upward sloping supply curve and the same tax is levied on suppliers, which market would produce the smallest amount of deadweight loss?
A) A B) B C) C D) D E) C and D