Refer to the graph shown. If this monopolistically competitive firm maximizes profit, it will:
A. charge $78 per dress.
B. charge $45 per dress.
C. charge $85 per dress.
D. shut down because it cannot cover its opportunity costs.
Answer: C
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Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?
What will be an ideal response?
Assume the market in the graph shown was originally at an equilibrium with demand D and supply S. The original equilibrium price and quantity were, respectively:
A. $5 and 30. B. $5 and 20. C. $10 and 20. D. $20 and 10.
If the Fed wants to reverse the effects of a favorable supply shock on unemployment, it should
a. increase the money supply growth rate which raises the inflation rate. b. increase the money supply growth rate which reduces the inflation rate. c. decrease the money supply growth rate which raises the inflation rate. d. decrease the money supply growth rate which reduces the inflation rate.
If a country is producing at point where an increase in the production of one good requires a reduction in the production of another good, then it must be producing at an:
A. efficient point. B. undesirable point. C. unattainable point. D. inefficient point.