A perfectly competitive firm is maximizing profits in the short run. This implies that the firm is earning the most economic profits possible, which
A. must be positive.
B. exist at the point at which price equals total cost.
C. must be either zero or positive.
D. can be positive, negative, or zero.
Answer: D
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When a firm increases its capital usage
a. the total product curve can be expected to fall. b. the total product curve can be expected to rise. c. the marginal product of labor always rises. d. the marginal product of labor always falls
Which of the following is NOT associated with the new Keynesian economics?
A) small-menu cost theory B) market-clearing models to explain business cycles C) inflation dynamics D) sticky-price theories of real GDP determination
A decrease in net taxes during a recession increases aggregate demand and helps the economy return to its potential output level
a. True b. False Indicate whether the statement is true or false
Which of the following is a question answered with normative economic reasoning?
A. If the college offers free textbooks for students, will more students read their textbooks? B. If the college provided less financial aid for out-of-state students, would more in-state students benefit? C. If the college increased its enrollment requirements, would class size decline? D. Should the college increase tuition to fund its athletic programs?