If marginal revenue exceeds marginal cost, a profit-maximizing monopolist will
a. raise price and decrease output.
b. lower price and increase output.
c. reduce both output and price.
d. hold output constant and raise price.
B
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If a U.S. firm buys tulips from a Dutch firm and the Dutch firm uses the dollars it gets to buy U.S. stocks, the U.S. trade balance ________ and the U.S. financial account ________
A) rises; rises B) rises; falls C) falls; falls D) falls; rises
Which of the following makes it more difficult for monetary policy makers to time policy changes correctly?
a. Monetary policy makers cannot act without congressional approval. b. The primary effects of the policy change will not be felt for 6 to 15 months into the future. c. The Board of Governors of the Federal Reserve System does not meet very often. d. Monetary policy affects only the general level of prices; it exerts no impact on real variables such as output and employment.
The fundamental source of monopoly power is
a. barriers to entry. b. profit. c. decreasing average total cost. d. a product without close substitutes.
Which of the following is a behavioral implication of bounded rationality?
A) unbounded selfishness B) a rule of thumb C) a rational mistake D) a nervous breakdown