Refer to Figure 13-7. Which of the following statements describes the best course of action for the firm depicted in the diagram?
A) The firm should exit the industry because its price is less than its average total cost.
B) The firm should minimize its losses by producing Qy units and charging a price of P0.
C) The firm should minimize its losses by producing Qy units and charging a price of P1.
D) The firm should minimize its losses by producing Qy units and charging a price of P2.
C
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An inferior good has an income elasticity of demand that is
A. positive but less than 1. B. zero. C. negative. D. positive.
Cyclical unemployment results from:
A. a deficiency of spending on goods and services. B. the decreasing relative importance of goods and the increasing relative importance of services in the U.S. economy. C. the everyday dynamics of a free labor market, with workers voluntarily changing jobs. D. technological change.
If the economy is at potential output, actual inflation
A. equals expected inflation. B. is less than expected inflation. C. is greater than expected inflation. D. equals the natural rate of unemployment.
Suppose the government cuts taxes. We would expect interest rates to ________ and the dollar to ________ in foreign exchange markets
A) rise; depreciate B) fall; appreciate C) rise; appreciate D) fall; depreciate