The marginal revenue of a monopolistically competitive firm
A) cannot be negative because the price the firm charges will always be greater than zero.
B) can be negative if the firm charges a high price.
C) can be negative if the firm charges a low price.
D) will equal average revenue.
Answer: C
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Based on the figure below. Starting from long-run equilibrium at point C, a tax increase that decreases aggregate demand from AD1 to AD will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies.
A. D; C B. D; B C. A; B D. B; C
The figure above shows the market for pants. If the government subsidizes the production of pants so that production expands from 6 million pairs to 7 million pairs,
A) there would be no deadweight loss. B) the government's policy would have no effect on the sum of consumer surplus and producer surplus. C) a deadweight loss would result. D) the government's policy would increase the sum of consumer surplus and producer surplus. E) production would be even more efficient than if 6 million pairs of pants are produced because more is always better than less.
If you hear an economist argue that the economy does not experience business cycles but merely experiences variations in economic activity over time, you know that economist belongs to the school of
a. real business cycle theory b. Keynesian economics c. production possibilities growth theory d. accelerator cycle theory e. capital-based, long run growth theory
Figure 10-8
?
Figure 10-8 illustrates a period of
A. low unemployment and high inflation. B. low unemployment and low inflation. C. high unemployment and high inflation. D. high unemployment and low inflation.