Productive efficiency occurs in markets when
a. goods are produced at the lowest possible average total cost
b. goods are produced at the lowest average variable cost
c. goods are produced at the lowest marginal cost
d. goods are produced at the lowest average fixed cost
e. the economy is producing the maximum quantity of goods and services it can
A
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Refer to Table 14-9. In order to maximize profit, the firm will produce a level of output where marginal cost is equal to
a. $6. b. $7. c. $8. d. $9.
On a production possibilities diagram, points inside the frontier are: a. unattainable given existing technology and resources. b. inefficient
c. efficient. d. efficient but not necessarily desirable.
Each point on the supply curve shows the: a. amount that people want to buy at that price
b. quantity supplied at that price. c. productive capacity of an individual producer. d. the amount producers want to sell to buyers of different income levels.
A problem that the Fed faces when it attempts to control the money supply is that
a. since the U.S. has a fractional-reserve banking system, the amount of money in the economy depends in part on the behavior of depositors and bankers.
b. the Fed has to get the approval of the U.S. Treasury Department whenever it uses any of its monetary policy tools.
c. while the Fed has the ability to change the money supply by a large amount, it does not have the ability to change it by a small amount.
d. federal legislation in the 1950s stripped the Fed of its power to act as a lender of last resort to banks.