Firms are "price makers" if they
A) have sufficient market power to set their product price.
B) make the market price their product price.
C) make their product price competitive.
D) None of the above
A
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A perfectly competitive firm will have an economic profit of zero if, at its profit-maximizing output, its marginal revenue equals its
A) average total cost. B) marginal cost. C) average variable cost. D) average fixed cost.
According to efficiency wage theory, a firm that raises wages by one percent will actually lower the labor cost per unit of output if the wage increase
A) raises output per worker by more than one percent. B) raises output per worker by less than one percent. C) does not change output per worker. D) lowers output per worker by less than one percent.
During periods of unemployment
A) the economy operates at a point inside the production possibilities curve. B) the economy operates at a point outside the production possibilities curve. C) the production possibilities curve shifts inward. D) the production possibilities curve shifts outward.
Assume that the required reserve ratio is 10%. An increase of $1,000 in the banking system's excess reserves may result in a total expansion of new deposits for the banking system as a whole by as much as
A) $1,000. B) $9,000. C) $10,000. D) $100,000.