We can measure the profits earned by a firm in a competitive industry as
a. (P - ATC) × Q.
b. (P - MC) × Q.
c. MR × MC.
d. (MC - ATC) × Q.
Answer: a. (P - ATC) × Q.
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If autonomous investment increases by $200 billion and the marginal propensity to consume (MPC) is 0.5, then
A) real Gross Domestic Product (GDP) will rise by $100 billion. B) real Gross Domestic Product (GDP) will rise by $200 billion. C) real Gross Domestic Product (GDP) will rise by $400 billion. D) real Gross Domestic Product (GDP) will decrease by $100 billion.
Higher input prices result in
A) upward shifts of MC and reductions in output. B) upward shifts of MC and increases in output. C) downward shifts of MC and reductions in output. D) downward shifts of MC and increases in output. E) increased demand for the good the input is used for.
Inventory depletion is a warning sign of
A. A drop in AS. B. Deflation. C. A drop in AD. D. Inflation.
Which price ceiling will cause the greatest excess demand?
A. $1 B. $2 C. $3 D. $4