For all firm types price equals marginal revenue, and for competitive firms price equals average revenue
a. true
b. false
Answer: b. false
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An outward shift of the production possibilities curve demonstrates
A) economic growth. B) an increased rate of inflation. C) a cyclical shock. D) a recession.
The discount rate is typically:
A. determined by the government, and does not correlate with other interest rates. B. about the same as federal funds rate. C. higher than federal funds rate. D. lower than federal funds rate.
The price of a good will fall when:
A. there is a shortage of the good. B. there is a surplus of the good. C. demand for the good increases. D. the supply of the good decreases.
Suppose that the inverse demand for a downstream firm is P = -82 ? 2Q. Its upstream division produces a critical input with costs of CU(Qd) = 3(Qd)2. The downstream firm's cost is Cd(Q) = 2Q. When there is no external market for the downstream firm's critical input, the downstream firm should produce:
A. 14 units. B. 10 units. C. 12 units. D. 8 units.