If a perfectly competitive firm charges a price that is equal to its average total cost:
A. the firm is earning an economic profit equal to zero.
B. the firm is earning an economic profit greater than zero.
C. the firm is earning an economic profit less than zero.
D. It is not possible to determine anything about the firm's profits.
Answer: A
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If two variables are unrelated, a scatter diagram of those variables will
A) be a vertical line. B) be a horizontal line. C) be either a vertical or horizontal line. D) have a constant positive slope.
A monopolist can maximize profits by:
A. selling as much as he can produce. B. producing at the level of output at which MR = 0. C. following the same rules as a perfectly competitive firm. D. selling an output where P = ATC.
Critics of advertising make which of the following claims about advertising? i. It often creates "needs" for trivial products. ii. It manipulates people's tastes. iii. It uses scarce resources and raises costs
a. (i) and (ii) only b. (i) only c. (ii) only d. (i), (ii), and (iii)
International capital flows in an open economy have the effect of
A. increasing the power of fiscal policy. B. reducing the power of fiscal policy. C. reducing the power of fiscal policy in an expansion, and increasing it in a contraction. D. increasing the power of fiscal policy in an expansion, and reducing it in a contraction.