The short-run equilibrium output of a competitive firm is found by equating marginal cost with price
a. True
b. False
Indicate whether the statement is true or false
True
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Refer to the above figure. The government has just engaged in expansionary fiscal policy shifting the aggregate demand curve from AD1 to AD2. Interest rates have started to rise. Which of the following statements is TRUE in the short run?
A) Real GDP will be $14 trillion since the effect of government spending is not influenced by interest rates. B) Real GDP will end up somewhere between $11 and $14 trillion as businesses and consumers reduce their spending in response to the increase in interest rates. C) Real GDP will go beyond $14 trillion as businesses and consumers react to the increase in interest rates. D) Real GDP will fall back to $11 trillion since the effect that increased government spending has on real GDP is short lived.
Health care is generally considered a normal good. Briefly explain what you would expect to see happen to spending on health care over time, with health care being considered as a normal good
What will be an ideal response?
The change in consumption divided by a change in disposable income is called the:
a. consumption function. b. marginal propensity to consume. c. marginal propensity to spend. d. spending function. e. changing propensity to consume.
Choosing to study for an exam until the extra benefit (e.g., improved score) equals the extra cost (e.g., the value of foregone activities) is:
A. an application of the Scarcity Principle. B. not an economic choice. C. not rational because it ignores the importance of total benefits and total costs. D. an application of the Cost-Benefit Principle.