If a firm in a perfectly competitive market is currently producing the output where price = marginal cost = average total cost, the firm is:
A. earning a positive economic profit.
B. earning a zero economic profit.
C. suffering an economic loss.
D. All of these
Answer: B
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A policy of maintaining a fixed interest rate will have the greatest stabilizing effect on output when money demand is
A) stable. B) unstable and commodity demand is unstable. C) stable and commodity demand is unstable. D) unstable and commodity demand is stable.
Purchasing power parity's assumption that the real exchange is constant
A) is correct in nearly all instances. B) would be correct were it not for the existence of trade barriers. C) is not reasonable. D) is correct for trade between the United States and Japan, but incorrect in most other bilateral trading relations.
In the U.S. economy, which of the following is NOT a generally accepted economic function of government?
A) providing public goods B) distributing consumer goods C) ensuring economy-wide stability D) promoting competition in the marketplace
Because a price floor causes:
A. a shortage, some form of rationing must occur. B. a surplus, some producers may ultimately lose because they won't have enough customers. C. a shortage, rent-seeking will occur. D. a surplus, everyone will be better off.