Suppose a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He could maximize profits (or minimize losses) by:
A. decreasing output and leaving price unchanged.
B. increasing price and decreasing output.
C. decreasing price and increasing output.
D. decreasing price and leaving output unchanged.
Answer: B
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Because producers do not bear the external cost of pollution,
A) private production exceeds the economically efficient level. B) the economically efficient level of production is achieved. C) private production is below the economically efficient level. D) the market price for the product being produced by the pollution-generating company is too high.
Real GDP decreases during
A) the movement from trough to peak. B) the movement from below potential GDP back to potential GDP. C) the movement from peak to trough. D) a decrease in unemployment.
Explain how an increase in business investment at a constant price level changes equilibrium expenditure
What will be an ideal response?
If the United States decides to convert automobile factories to tank production, as it did during World War II, but finds that some auto manufacturing facilities are not well suited to tank production, then
A. Increasing opportunity costs will occur with greater tank production. B. The production possibilities curve between tanks and automobiles will appear as a straight line. C. The production possibilities curve between tanks and automobiles will shift outward. D. Decreasing opportunity costs will occur with greater automobile production.