When price is sufficient to cover average variable costs, firms suffering short-run losses will continue to operate rather than shut down.
Answer the following statement true (T) or false (F)
True
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Which of the following statements is true of the law of demand?
a. All else equal, the quantity demanded of a good is inversely related to its price. b. All else equal, the demand for a good is inversely related to its price c. All else equal, the quantity demanded of a good is directly related to its price. d. All else equal, the demand for a good is directly related to its price.
The following figures are for the banking system. Deposits at the central bank = 400 U.S. Government Securities = 600 Transactions Deposits = 1,700 Loans = 800 Stockholder's Equity = 70 Other Assets = 450 Other Liabilities = 380 Borrowing from the Federal Reserve = 250 Cash in the Vault = 150 The reserve ratio on transactions deposits = 10% Currency in circulation = 10 The monetary base equals:
a. A multiple of 80 b. A multiple of 250 c. 560 d. Cannot be determined with this information. e. 1,700
Monopolistic competition is characterized by excess capacity because:
A. firms charge a price that is less than marginal cost. B. firms produce at an output level less than the least-cost output. C. the demand for a product is perfectly elastic in this type of industry. D. firms are always profitable in the long run.
A bridge built by the government of Nepal collapsed in the same year it was constructed. If the total cost of building the bridge was $4 million, which of the following will happen as a result of its collapse?
A) GDP will decrease. B) GDP will remain unchanged. C) Nepal's trade deficit will increase. D) Nepal's trade surplus will increase.