Exhibit 10-1 A monopolistic competitive firm
As presented in Exhibit 10-1, the short-run profit-maximizing output for the monopolistic competitive firm is:
A. zero units per day.
B. 200 units per day.
C. 400 units per day.
D. 600 units per day.
Answer: C
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Suppose a profit-maximizing firm in a perfectly competitive market is earning an economic profit of $1,345. If the firm's fixed cost increases from $200 to $300, the firm will:
A. earn a smaller profit. B. reduce its output. C. earn a greater profit. D. raise its price.
According to the natural rate hypothesis, if the economy begins at full employment with an unemployment rate of 5 percent and then the inflation rate increases from 2 percent to 4 percent, then the economy will
A) not see any lower unemployment, even temporarily, just higher inflation. B) have lower unemployment but then return to its natural rate with an inflation rate of 4 percent. C) eventually return to its natural rate of 2 percent inflation and its natural unemployment rate of 5 percent. D) eventually return to its natural rate of 2 percent inflation and a new lower unemployment rate. E) stay at the 4 percent inflation rate and the natural unemployment rate will fall.
As the price level falls, ceteris paribus, people holding some of their wealth in monetary form become
A) less wealthy and they buy less. B) more wealthy and they buy more. C) less wealthy and they buy more. D) more wealthy and they buy less.
Microeconomics
What will be an ideal response?