When a demand curve is perfectly elastic:
A) marginal revenue = average revenue = price.
B) marginal revenue > average revenue = price.
C) marginal revenue < average revenue = price.
D) marginal revenue > average revenue > price.
A
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A third-degree price discriminating monopolist can sell its output either in the local market or on an internet auction site (or both)
After selling all of its output, the firm discovers that the marginal revenue earned in the local market was $20 while its marginal revenue on the internet auction site was $30. To maximize profits the firm should A) have sold more output in the local market and less at the internet auction site. B) do nothing until it acquires more information on costs. C) have sold less output in the local market and more on the internet auction site. D) sell less in both markets until marginal revenue is zero. E) sell more in both markets until marginal cost is zero.
Because banks make loans based on expectations concerning future economic activity, they
a. tend to make more loans during recessions and fewer loans during periods of prosperity, which helps the economy b. tend to make more loans during periods of prosperity and fewer loans during recessions, which doesn't help the economy c. make the same level of loans whether there is prosperity or recession but the profit they earn, which is based on the interest rate, varies d. expand the money supply faster in recessions than during periods of prosperity e. keep more excess reserves during periods of prosperity than during recessions
Which of the following contributed to the financial crisis of 2008?
a. the housing price boom (2002-2005), followed by a housing price bust (2007-2008) b. a sharp reduction in stock prices in 2008 c. a sharp increase in the price of crude oil from January 2007 to mid-year 2008 d. all of the above
Suppose the economy goes from a point on its production possibilities frontier (PPF) to a point directly to the left of it. Assuming that the PPF has not shifted, this could be due to
A) a gain of resources. B) a loss of resources. C) technological improvement in the production of both goods. D) a new law that interferes with productive efficiency.