Refer to Figure 26.2 for a monopolistically competitive firm. At the profit-maximizing output and price, this firm is experiencing economic
A. Profits and should stay in this market in the long run.
B. Profits but could make even higher economic profits producing the next best alternative good.
C. Losses and should shut down in the short run.
D. Losses but should keep producing in the short run.
Answer: D
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To fight unemployment and close a recessionary gap, the Fed ______
A. stimulates aggregate demand by lowering the federal funds rate, which increases the quantity of money B. stimulates aggregate supply by lowering the federal funds rate, which increases potential GDP C. increase employment, which increases real GDP D. increases bank reserves, which banks use to make new loans to busi-nesses, which increases aggregate supply
The more firms are present in a market, the:
A. more competition is likely to be present. B. less competition is likely to be present. C. more like a monopoly it will behave. D. more collusion is likely to occur.
Computer forecasting models are most accurate at predicting the economy when
a. inflation is accelerating. b. there is a turn in the business cycle. c. economic conditions are relatively stable. d. supply shocks impact the economy.
Malthus predicted that the power of population
a. was greater than the power of the earth to produce subsistence. His forecast was on the mark. b. was greater than the power of the earth to produce subsistence. His forecast was off the mark. c. was less than the power of the earth to produce subsistence. His forecast was on the mark. d. was less than the power of the earth to produce subsistence. His forecast was off the mark.