Average total cost is defined as:
A. total variable cost divided by quantity.
B. quantity divided by total variable cost.
C. the change in total variable cost divided by the change in quantity.
D. total cost divided by quantity.
Answer: D
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The opportunity cost of money is:
A. the price level. B. the time spent going to the bank to withdraw funds. C. the nominal interest rate. D. the fees charged by banks to provide checking services.
A monopolist faces the least price-elastic demand curve because:
a. the consumers have only one place to buy the good. b. the monopolist produces a standardized product. c. the monopolist undertakes a huge expenditure to produce the product. d. the monopolist supplies to an insignificant portion of the market. e. the monopolist produces an absolutely necessary good having close substitutes.
Which one of the following is an area of continued disagreement among modern macroeconomists with regard to the use of fiscal policy?
a. Automatic stabilizers help reduce the fluctuations in aggregate demand and output. b. It is difficult to time changes in discretionary fiscal policy in a manner that will promote stability. c. Fiscal policy is much less potent than the early Keynesian view implied. d. Budget deficits are a highly effective tool with which to combat a severe recession.
If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will
a. earn economic losses. b. earn economic profits. c. earn zero economic profits. d. produce a lower quantity of output than is socially optimal.