Using the information in Situation 20-1, if aggregate output equals $8,000, the unplanned inventory investment equals
A) -$100
B) $0
C) $100
D) $500
A
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A firm in monopolistic competition is
A) efficient because in the long run it earns zero economic profit. B) efficient because it produces at the minimum average total cost. C) inefficient because price exceeds marginal cost. D) efficient because of the ease of entry. E) efficient because it produces where MR = MC.
Suppose a technology is described by the production function 
a. For a price taking producer who faces output price p and wage w, derive the first order condition and interpret it.
b. Without knowing more about the function f, is the condition you derived in (a) either necessary or sufficient for deriving the profit maximizing production plan? Explain.
c. Suppose 
. Derive the first order condition you illustrated in (a) and solve for 
.
d. For what values of 
is this first order condition necessary and sufficient for deriving a profit maximizing production plan? Explain.
What will be an ideal response?
The market for used cars is shown in the above figure. Neither buyers nor sellers can tell whether any given car is a lemon. Forty percent (40%) of all cars are lemons. Which of the following statements is TRUE?
A) All of the cars will be sold at $1,600. B) No cars will be sold. C) Only lemons are sold for $1,000. D) Only good cars will be sold for $2,000.
In the long run, if the Fed decreases the rate at which it increases the money supply,
a. inflation and unemployment will be higher. b. inflation will be higher and unemployment will be lower. c. inflation will be lower and unemployment will be higher. d. None of the above is correct.