The Phillips curve represents the trade-off between:
a. output and interest rates.
b. inflation and expected inflation.
c. output and unemployment.
d. inflation and unemployment.
Ans: d. inflation and unemployment.
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Marginal utility is equal to
A. total utility multiplied by quantity consumed. B. change in total utility multiplied by change in quantity consumed. C. change in total utility divided by change in quantity consumed. D. total utility divided by quantity consumed.
"If a natural monopoly is regulated using a marginal cost pricing rule, the firm makes zero economic profit." Is the previous statement correct or incorrect? Explain your answer
What will be an ideal response?
Which of the following statements about externality is INCORRECT?
A) Pollution of a chemical plant will create negative externalities to the residents living in the neighborhood. B) Trees planted in the backyard of a house could create positive externalities to the pedestrians passing under. C) Extra output sold by a firm that lowers the market price creates negative externalities to its rivals. D) A single action may confer positive externalities on some people, but negative externalities on others.
A firm has $200 million in total revenue and explicit costs of $190 million. Suppose its owners have invested $100 million in the company at an opportunity cost of 10 percent interest rate per year. The firm's economic profit is:
A. $400 million. B. $100 million. C. $80 million. D. zero.