When the choice variable is a continuous variable, the decision rule for an unconstrained maximization problem is:
A. If MB < MC, decrease the activity.
B. Choose the activity so that MB = MC.
C. If MB > MC, increase the activity.
D. all of the above
E. none of the above
Answer: D
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Monopolies are inefficient because, at the profit-maximizing output level,
A) MC = MR. B) MC does not equal MR. C) MB = MC. D) MB does not equal MC. E) P = ATC.
Supply-side economics calls for:
a. lower taxes on businesses and individuals. b. regulatory reforms to increase productivity. c. government subsidies to promote technological advance. d. All of these.
In the classical model with an open economy, an increase in government purchases always causes complete crowding out
a. True b. False
The recession of the early 1990s was triggered by a decrease in aggregate supply
Indicate whether the statement is true or false