If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q, then the firm will produce at a price of
A. $1,400.
B. $1,600.
C. $1,700.
D. $16.
Answer: C
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In the aggregate expenditures model, a decrease in government spending causes a(n):
a. upward shift in the aggregate expenditures curve. b. downward shift in the aggregate expenditures curve. c. shift in the 45-degree line. d. rightward movement along the aggregate expenditures curve. e. leftward movement along the aggregate expenditures curve.
When nations trade based upon comparative advantage, only one side of the transaction will benefit.
Answer the following statement true (T) or false (F)
Providing citizens with enforceable property rights to resources
a. increases resource conservation and decreases wasteful resource use. b. promotes economic prosperity and thus increases demand for environmental quality. c. provides people with a strong incentive not to damage the privately owned resources of others. d. does all of the above.
A student receives a five-year loan to pay for a $2,000 used car. The lender and the student agree to an 8% interest rate on a fixed-rate loan. Expected inflation was estimated to equal 2.5%, but unexpectedly decreases to 2%. Which of the following is true?
A. The real interest rate decreased. B. Both the student and the lender benefit. C. The lender is made worst off because his real return on the car loan is lower. D. The student is made worse off because her real cost of borrowing is higher.