In long-run equilibrium, the perfectly competitive firm produces
A. where P = MC = AC.
B. at the lowest point on its long-run average cost curve.
C. where its long-run average cost curve is tangent to its horizontal demand curve.
D. All of the responses are correct.
Answer: D
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The Times Series Regression with Multiple Predictors
A) is the same as the ADL(p,q) with additional predictors and their lags present. B) gives you more than one prediction. C) cannot be estimated by OLS due to the presence of multiple lags. D) requires that the k regressors and the dependent variable have nonzero, finite eighth moments.
The decision of which assumptions to make is
a. an easy decision for an economist, but a difficult decision for a physicist or a chemist. b. not a particularly important decision for an economist. c. usually regarded as an art in scientific thinking. d. usually regarded as the easiest part of the scientific method.
When a positive externality exists in a market, total surplus:
A. is the same as a market without a negative externality. B. is decreased by deadweight loss compared to that same market without a negative externality. C. is the same but re-distributed differently than if that same market did not have a negative externality. D. is increased by deadweight gain compared to that same market without a negative externality.
Kendra is having difficulty deciding between two cars, A and B. As shown in the accompanying diagram, A has more cargo room than B, but lower gas mileage. Ideally Kendra would like a car both with a lot of cargo room and good gas mileage. 
If Kendra behaves like most decision-makers, then the addition of option C would:
A. have no impact on her choice of A and B. B. increase her likelihood of picking B. C. increase her likelihood of picking A. D. decrease her likelihood of buying a car.