A perfectly competitive firm is currently producing where price is $8 and both marginal cost and average variable cost are $9 . To maximize profit or minimize loss in the short run, this firm should
a. raise its price
b. increase its output
c. reduce its output
d. lower its price
e. shut down
E
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What is the outcome of demand-side policies when aggregate supply is upward-sloping?
What will be an ideal response?
If producers must receive a higher price to be induced to produce any quantity, we can conclude that
A. both supply and demand increased. B. demand decreased. C. demand increased. D. supply decreased.
Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. If the marginal cost of installing carpet is a constant $1 per sq yard, what price does Bob charge each segment?
What will be an ideal response?
The prospect of a recession in the United States would probably cause the dollar to
a. depreciate because interest rates would be expected to rise. b. depreciate because imports would be expected to rise. c. appreciate because imports would be expected to fall. d. appreciate because interest rates would be expected to decrease.