A firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC = $6; AVC = $3; MR = MC = $5. The firm is
A) earning economic profits.
B) experiencing economic losses.
C) experiencing zero profits.
D) in a position in which it should shut down.
B
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Comparing the situation of a nominal interest rate of 10 percent and an inflation rate of 9 percent with a nominal interest rate of 6 percent and inflation rate of 2 percent, consumers would borrow more in which situation?
A) Nominal interest rate of 10 percent since real interest rate is 1 percent. B) Nominal interest rate of 6 percent since the real interest rate is 4 percent. C) Nominal interest rate of 10 percent since the real interest rate is 9 percent. D) Nominal interest rate of 6 percent since the real interest rate is 2 percent.
If Joel buys ten floppy disks, which are worth a total of $30 to him, and he pays $1 a disk, how much consumer surplus does he derive?
a. $24 b. $15 c. $20 d. $10 e. $2 from each floppy disk
The initial impact of ________ the money supply ________ the balance of payments.
A. contracting; has no effect on B. expanding; improves C. contracting; worsens D. expanding; worsens
If an individual is a debtor, an increase in the interest rate
A. decreases current consumption. B. has no effect on current consumption. C. increases current consumption. D. will either increase or decrease current consumption depending on the size of the income and substitution effects.