A firm earns an operating profit if
a. price equals marginal cost.
b. revenues exceed variable costs of production.
c. price is less than average variable costs of production
d. revenues equal fixed costs.
Answer: b. revenues exceed variable costs of production.
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Describe the provisions of the Sherman Act
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The typical labor supply curve is upward sloping but it is possible for the curve to be backward bending —negatively sloped—at very high wage levels. Which of the following would cause a backward-bending supply curve?
A) This would occur if leisure is an inferior good. B) This would occur when the substitution effect from an increase in the wage becomes larger than the income effect. C) This would occur when a large number of workers choose leisure rather than employment at low wages; only a very large increase in the wage will lead these workers to prefer employment to leisure. D) This would occur when the income effect from an increase in the wage becomes larger than the substitution effect.
Suppose a bank has $100,000 in checking account deposits with no excess reserves and the required reserve ratio is 10 percent. If the Federal Reserve raises the required reserve ratio to 12 percent, then the bank will now have excess reserves of
A) $12,000. B) $0. C) -$2,000. D) -$12,000.
Explain why the social demand curve for a public good is the vertical sum of the demand curves of each individual
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