A firm that is producing the quantity at which marginal cost exceeds both average total cost and the market price will increase its economic profit by _______
A. producing a larger quantity
B. raising the price to equal marginal cost
C. producing a smaller quantity
D. producing the quantity that minimizes average total cost
C The market price equals the firm's marginal revenue. When a firm's marginal cost exceeds its marginal revenue, the firm's profit increases if it decreases its production.
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If the required reserve ratio is decreased from .2 to .1 the demand deposit expansion multiplier
A) increases from 5 to 10. B) increases from 4 to 4.5. C) decreases from 5 to 2.5. D) decreases from 2 to 1.
Collective decision making costs _____
a. decrease as we get closer to unanimity b. increase as more people have to agree c. are an impediment to individual action d. are the reason why simple majority rule is always optimal
A substantial decrease in marginal tax rates will encourage individuals to
a. increase their earnings and work effort. b. save a smaller portion of their income. c. take more time off for vacations. d. spend more on tax-deductible items.
If consumption expenditures are $200 billion, total investment is $50 billion, government purchases are $40 billion, exports are $45 billion, imports are $40 billion, aggregate expenditures must be:
A. $275 billion. B. $295 billion. C. $320 billion. D. $395 billion.