If MR < MC, a monopolist should:
A. increase production.
B. decrease production.
C. maintain the same level of production.
D. stop producing.
Answer: B
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Rational production decisions require an understanding of
A. trade-offs. B. opportunity costs. C. scarcity of resources. D. All of the responses are correct.
Perfect price discrimination describes a situation in which the monopolist
a. knows the exact willingness to pay of each of its customers. b. charges exactly two different prices to exactly two different groups of customers. c. maximizes consumer surplus. d. experiences a zero economic profit.
Which of the following restrictions implies that investment exceeds private saving for a closed economy?
a. The economy has no government. b. The economy's government is running a budget deficit. c. The economy's government is running a budget surplus. d. No restriction is necessary; investment and private saving are equal for all closed economies.
The magnification of small changes in spending into larger changes in output and income is produced by:
A. the average propensity to consume. B. saving. C. the multiplier effect. D. the average propensity to save.