According to Say's law, there cannot be overproduction of goods and services because:
A. planned aggregate expenditures sometimes fall short of total output.
B. prices and wages are "sticky" or inflexible in the downward direction.
C. demand creates its own supply.
D. supply creates its own demand.
Answer: D
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Based on the model, the firm’s M? function must be
Consider the following model for the production of refined oil: MSC = 10 + 0.5Q; MEC = 0.3Q; MSB = 30 – 0.3Q; MEB = 0. a. M? = 20 – 0.8Q c. M? = 0.3Q b. M? = 20 – 0.5Q d. M? = 20 – 0.1Q
For a perfectly competitive firm, marginal revenue is
A) less than the price. B) greater than the price. C) equal to the price. D) equal to the change in profit from selling one more unit. E) undefined because the firm's demand curve is horizontal.
In order to increase economic growth, a government can
A) discourage research and development. B) decrease funding on education. C) discourage specialization and trade. D) establish property rights and a legal system. E) tax saving in order to encourage more spending.
The figure above shows a perfectly competitive firm. When the firm maximizes its profit, its total cost is
A) $1,200. B) less than $1,200 but more than zero. C) more than $1,200. D) zero.