You are hired as an economic consultant to The Pampered Pet Shop. The Pampered Pet Shop operates in a perfectly competitive industry. This firm is currently producing at a point where market price equals its marginal cost. The market price is less than its average variable cost. You should advise the firm to
A. produce in the short run to minimize its loss, but exit the industry in the long run.
B. lower its price so that it can sell more units of output.
C. raise its price until it breaks even.
D. cease production immediately because it is not covering its variable costs of production.
Answer: D
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As of December 2008, the most important category in the CPI is
a. medical care b. education c. transportation d. food and beverages e. housing.
The money multiplier:
A. Is equal to the required reserve ratio times transactions deposits. B. Gets larger as the required reserve ratio increases. C. Is the reciprocal of the required reserve ratio. D. Represents the lending capacity of an individual bank.
Individual investors who always want to hold gold are known as:
A) goldfinger B) golden boys C) gold bugs D) goldilocks
The major social insurance program in the United States is
a. Social Security b. Temporary Assistance for Needy Families c. Medicare d. Medicaid e. food stamps