A firm will continue to produce in the short run even though economic profits are negative as long as
A) the amount of the loss is no greater than the amount of fixed cost.
B) MC = MR.
C) it earned positive economic profits last year.
D) it has fixed obligations to pay.
Answer: A
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The slope of the supply curve of reserves can be attributed to the fact that:
A) quantity supplied of reserves decreases with the federal funds rate. B) the supply of reserves is arbitrarily set by the World Bank. C) the Fed fixes the supply of reserves. D) quantity supplied of reserves increases with the federal funds rate.
Domestic demand for a good is QD = 3000 - 25P. The domestic supply of the good is QS = 20P. Foreign producers can supply any quantity at a price (P) of $30
a. What is the domestic equilibrium price and quantity? b. At this domestic equilibrium price, how much of the good will be supplied by domestic producers and how much by foreign producers?
How much is the percentage of income received by the lowest quintile on line R?
Refer to the diagram for a pure monopolist. If a regulatory commission sets the price to achieve the socially optimal allocation of resources, it will have to:
A. tax the monopolist P 3 P 1 per unit to prevent the monopolist from realizing an economic
profit.
B. subsidize the monopolist or the monopolist will go bankrupt in the long run.
C. subsidize the monopolist P 1 P 4 per unit to allow the monopolist to break even.
D. tax the monopolist P 1 P 2 per unit to prevent the monopolist from realizing an economic
profit.