If a firm in a competitive industry is making zero economic profit but still producing, it must be the case that:
A. MC = MR > ATC.
B. MC = MR < ATC.
C. MC = ATC > MR.
D. MC = MR = ATC.
Answer: D
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Suppose that the price elasticity of demand for a product is -1 and that the price elasticity of supply is +1 . Assume also that the income elasticity of demand is +2 . Then an increase in income of 10% will raise equilibrium price by:
a. 10%. b. 5%. c. 20%. d. an annual amount that cannot be determined.
Crowding out occurs because lower interest rates discourage saving and make it harder to borrow
a. True b. False Indicate whether the statement is true or false
The first phase of antitrust policy in the U.S. began with the passage of the Sherman Antitrust Act in 1890 . To judge a firm's action, the courts in this period used:
a. a per se rule. b. a rule of reason. c. a rule of thumb. d. rules of order. e. strict enforcement rule.
When a commercial bank borrows from a Federal Reserve Bank
A. the supply of money automatically increases. B. it indicates that the commercial bank is unsound financially. C. the commercial bank's lending ability is increased. D. the commercial bank's reserves are reduced.