In which market structure will a firm choose not to shut down when price is less than average variable cost?
A. monopoly
B. monopolistic competition
C. perfect competition
D. None of these. Any firms will shut down when P < AVC.
Answer: D
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A White House proposal to lower business taxes by increasing tax deductions is an example of
A) progressive taxation. B) contractionary fiscal policy. C) automatic stabilization. D) expansionary fiscal policy.
You grow poplar trees. The lumber yard purchases cut trees from you. The trees grow 1 foot per year. Assuming a constant real price per foot for poplar and a real interest rate of 3%, would you sell a 20-foot tree today?
What will be an ideal response?
Normative economics ________ and positive economics ________.
A. does not involve judgments; involves judgments B. involves judgments; does not involve judgments C. involves judgments; also involves judgments D. does not involve judgments; also does not involve judgments
In real-business-cycle theory, changes in the:
A. Demand for money respond to changes in the supply of money B. Supply of money respond to changes in the demand for money C. Demand for money respond to changes in efficiency wages D. Supply of money respond to changes in coordination failures