Competitive pricing is efficient because
A) the price that consumers pay reflects the opportunity cost to society of producing the good.
B) firms make positive economic profits in long-run equilibrium.
C) average revenue equals average cost.
D) firms produce above the minimum efficient scale.
A
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Which of the following is likely to happen if the quantity of bank reserves held at the Fed increases?
A) The stock of money in the economy increases. B) The number of loans issued by banks decrease. C) Bank deposits decrease. D) The real interest rate increases.
Consider a housing development built near an existing airport. After the houses are occupied, homeowners complain that the airport imposes a negative externality on them and it should be moved or otherwise limited
Is the airport a negative externality? A) No, the airport was there first. B) No, if the original property values reflect the costs imposed by the airport. C) No, airports are government entities and therefore don't impose costs on individuals. D) Yes, the airport's noise should be curtailed for the well-being of the homeowners.
If the world price of a good is lower than its domestic equilibrium price, the country will:
a. import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. b. export a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied domestically. c. import a quantity of the good equal to the difference between the quantity demanded domestically and the quantity supplied by foreign producers. d. export a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied domestically. e. import a quantity of the good equal to the difference between the quantity demanded by foreign consumers and the quantity supplied by foreign producers.
If a commodity’s price is above its marginal cost, the market will tend to produce too much of the good.
Answer the following statement true (T) or false (F)