Suppose both a monopolist and a perfectly competitive firm charge a price corresponding to the quantity at the intersection of the marginal cost and marginal revenue curves. If this price is between each firm's average variable cost and average total cost curves,
A. the perfectly competitive firm will continue to operate in the short run but the monopolist will shut down.
B. both firms will continue to operate in the short run.
C. both firms will shut down in the short run.
D. the perfectly competitive firm will continue to operate in spite of the loss but the monopolist will earn a profit.
Answer: B
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When the government deliberately alters its level of spending? and/or taxes in order to achieve specific national economic? goals, it is exercising
A) a laissez-faire policy.
B) discretionary fiscal policy.
C) monetary policy.
D) a Ricardian policy.
Futures contract prices are established
A) through an auction process in the "pit" on the exchange floor. B) through brokers. C) through an over-the-counter network of futures dealers. D) through specialists on the stock and bond exchanges.
If the United States is to reduce poverty by using a negative income tax, the guaranteed income should be
a. two times the tax rate. b. close to the poverty line. c. close to the median income of all families. d. above the poverty line.
The median voter rule says that:
A. people "vote with their feet." B. the median voter will not bother to vote in the election, it is extremists who vote. C. the median voter never gets what he or she wants in an election. D. government decisions will reflect the preferences of the median voter.