The shutdown rule for a firm in a perfectly competitive industry is that the firm should cease production if
A. P < AFC.
B. P < ATC.
C. P < AVC.
D. P < MC.
Answer: C
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A reduction of the discount rate by the Federal Reserve Banks has the direct effect of
A) making it less costly for commercial banks to borrow from the Fed. B) making it more costly for the Treasury to finance deficits. C) increasing commercial bank reserves. D) increasing the stock of money. E) doing all of the above.
In a market with a Herfindahl-Hirschman Index of 2,000, according to their guidelines will the Department of Justice challenge a merger that would increase the index by 100?
What will be an ideal response?
In a natural monopoly, ATC ______ as output ______.
a. rises; expands b. falls; expands c. falls; falls d. rises; ceases
According to the convergence hypothesis, as the rate of technological adoption rises in poorer countries,
A. the gap between rich and poor countries increase. B. income inequality rises. C. the flow of net exports can be reduced. D. the gap between wealthy and poor countries close.