Productive efficiency refers to
A. setting TR = TC.
B. maximizing profits by producing where MR = MC.
C. cost minimization, where P = minimum ATC.
D. production at a level where P = MC.
Answer: C
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Any dollar amount received by a seller above the marginal cost of production is known as a
A. producer surplus. B. willingness to accept. C. consumer surplus.
If real GDP is $10 trillion and the velocity of circulation is 2, the quantity of money
A) is $2 trillion. B) is $5 trillion. C) is $20 trillion. D) cannot be determined from the information given.
Which of the following schematics most accurately represents economic fluctuations during a business cycle?
A) Shock -> Spending response by households and firms -> Multiplier effect -> Change in real GDP B) Shock -> Multiplier effect -> Spending response by households and firms -> Change in real GDP C) Shock -> Multiplier effect -> Change in real GDP -> Spending response by households and firms D) Shock -> Change in real GDP -> Spending response by households and firms -> Multiplier effect
Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?
a. No; lower interest rates will tend to slow down the economy and this will be bad for the stock market. b. Yes; the lower rates of interest will increase the value of future income (and capital gains) and stock prices will rise to reflect this factor. c. No; the lower rates of interest will reduce the value of future income (and capital gains) and this will cause stock prices to fall. d. Yes; the lower interest rates will cause inflation and inflation is generally good for the stock market.