A firm in a perfectly competitive industry is maximizing its economic profit by producing 500 units of output. At 500 units of output, which one of the following must be false?
a. MC < ATC
b. MC < AVC
c. MC > ATC
d. MR < ATC
e. MR > AVC
Answer: b. MC < AVC
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When a government chooses to have a zero deficit with regard to revenues and spending, it is operating with what kind of budget?
A) a slow economy budget B) a balanced budget C) a conservative budget D) a taxpayer-based budget
A market will experience a ____ when the price is above equilibrium and a ____ when the price is below equilibrium.
A. shortage, shortage B. surplus, surplus C. shortage, surplus D. surplus, shortage
The classical economists believed
A. wages and prices were inflexible downward. B. if nothing was done, recessions would become depressions. C. recessions needed quick countercyclical action by the government. D. the economy was essentially self-regulating.
Explain how deficit spending could be a burden to future generations
What will be an ideal response?