A competitive firm is currently producing a quantity of output at which marginal revenue exceeds marginal cost. In order to increase its profit, the firm should
a. increase the price of the good that it produces and sells.
b. increase its quantity of output.
c. decrease its total cost.
d. decrease its average total cost.
b
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The primary source of purchasing power used to buy imported goods is
What will be an ideal response?
The price elasticity of demand measures the responsiveness of changes in price to the quantity demanded.
Answer the following statement true (T) or false (F)
Figure 16.3Figure 16.3 depicts a market for electricity. S1 is the supply curve without the external costs. S2 is the supply curve with the $T tax. Assume electricity production incurs external costs. If the government imposes a pollution tax, the price of a mega-watt of electricity will increase by:
A. PA - PB. B. PA - PC. C. PB - PC. D. 1/2 (PA - PC).
If policymakers are concerned that the economy is in danger of rising inflation because aggregate demand is increasing faster than aggregate supply, the appropriate fiscal policy response is to
A) increase taxes. B) increase government spending. C) use expansionary fiscal policy. D) increase interest rates.