In Figure 32.1, at the supported price-quantity combination where production is limited, the variable cost to producers is 
A. 0HCQ*.
B. 0ABQD.
C. 0HGQD.
D. 0HEQS.
Answer: C
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A monopolistically competitive firm is like a perfectly competitive firm insofar as
A) both face perfectly elastic demand. B) both make an economic profit in the long run. C) both have MR curves that lie below their demand curves. D) both make zero economic profit in the long run.
Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?
What will be an ideal response?
Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:
a. stay in operation in the short-run. b. earn an economic profit. c. earn an economic profit in the long run. d. shut down.
A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000 . Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. If the required reserve ratio is 25 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?
a. zero; zero b. $500,000; $500,000 c. $500,000; $2,000,000 d. $250,000; $1,000,000