Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $12; AVC = $10; MC = $15; MR = $16. The firm should
A. decrease output.
B. increase price.
C. change nothing.
D. increase output.
Answer: D
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Positive economics:
a. will usually tell us which policy is best. b. reveals "what ought to be" in economic matters. c. is of little use to policy makers. d. is the scientific study of "what is" among economic relationships.
If supply and demand both decrease, the new equilibrium price will be ________ and the new equilibrium quantity will be ________.
A. higher; higher B. lower; lower C. uncertain; lower D. lower; uncertain
The real-balances effect on aggregate demand suggests that a ________.
A. higher price level will decrease the real value of many financial assets and therefore cause an increase in spending B. lower price level will increase the real value of many financial assets and therefore cause an increase in spending C. higher price level will increase the real value of many financial assets and therefore cause an increase in spending D. lower price level will decrease the demand for money, decrease interest rates, and increase consumption and investment spending
If nominal GDP is constant, then the GDP deflator varies inversely with
A. The CPI. B. Real GDP. C. The unemployment rate. D. COLAs.