Which of the following is an accurate statement about a firm operating at a loss?
a. It will stay open in the short run if its total revenue does not cover variable costs.
b. It will stay open in the short run if its total revenue covers variable costs but not all fixed costs.
c. It will shut down in the short run if its total revenue exceeds variable costs.
d. It will shut down in the short run if its total revenue cannot cover both variable and fixed costs.
b. It will stay open in the short run if its total revenue covers variable costs but not all fixed costs.
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Use the following graph for a private closed economy (an economy with only a private sector and no international trade) to answer the next question.
The equilibrium level of real GDP in this economy is
A. $250 billion. B. $350 billion. C. $450 billion. D. $150 billion.
If there is a decrease in the price of the final good that an industry produces, the labor demand curve in the industry is likely to:
A) shift to the left. B) shift to the right. C) become vertical. D) become horizontal.
Refer to Figure 15-15. Erickson Power is a natural monopoly because
A) average total cost is still declining when it intersects demand. B) of its continually declining marginal revenue curve as output rises. C) it is a power company and all power companies are natural monopolies. D) its marginal cost lies entirely below its long-run average cost.
The money supply is controlled by the
A) New York Stock Exchange. B) Federal Reserve System. C) stock of gold in the economy. D) President of the United States.