Suppose a profit-maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands falls below the minimum of its average total cost, but still lies above the minimum of average variable cost, in the short run the firm will
a. experience losses but will continue to produce rubber bands.
b. shut down.
c. earn both economic and accounting profits.
d. raise the price of its product.
a
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Other things being equal, the quantity theory of money suggests that any increase in the money supply
A) results in a decrease in the aggregate price level. B) causes the aggregate level of nominal Gross Domestic Product (GDP) to fall. C) causes a reduction in the demand for money. D) results in a proportionate increase in the price level.
What are the characteristics of an oligopoly?
What will be an ideal response?
The costs of regulation
A. are paid entirely by the regulated industries. B. are relatively small. C. are more than covered by the benefits gained from the regulation. D. include increased taxes and increased prices of the products being regulated.
The total demand for a public good is found by
A) horizontally summing all individual demands. B) vertically summing all individual demands. C) finding the demand from the median voter. D) dividing the marginal cost of the good by the number of voters.