To maximize profits in the off-peak period, the ________ marginal revenue is set equal to the ________ marginal cost.
A) off-peak; short-run
B) off-peak; long-run
C) peak; long-run
D) peak; short-run
A) off-peak; short-run
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Which of the following statements about potential GDP is false?
A) The Fed's goal is to have equilibrium GDP close to potential GDP. B) When GDP is at potential, cyclical unemployment is zero. C) It occurs when firms are producing at their maximum level of output. D) It occurs when firms are producing with a workforce of normal size working normal hours.
Specialization and international trade lead to
A) an outward shift in the production possibilities curve. B) an inward shift in the consumption possibilities frontier. C) a lower opportunity cost of domestic production of all goods. D) an enhanced level of consumption.
The impact of an increase in the money supply is a(n):
a. increase in the interest rate, which in turn stimulates investment and GDP. b. decrease in the interest rate, which in turn stimulates investment and GDP. c. reduction in the general level of prices, which will increase the disposable income of households. d. improvement in technology, which will stimulate both output and employment.
When the Federal Reserve buys U.S. government securities on the open market, it drives bond prices ____ and drives interest rates ____.
A. up; up B. down; down C. up; down D. down; up