A profit-maximizing firm in monopolistic competition should shut down in the short run
a. if marginal revenue is less than price
b. if price is always less than average total cost
c. if price is always less than average fixed cost
d. if price is always less than average variable cost
e. under no circumstances
D
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A number of firms who collude to make collective production decisions about quantities or prices is called:
A. a cartel. B. a duopoly. C. market power. D. a joint monopoly.
A subsidy to wheat farmers reduces the price of a bushel of wheat from $2.50 to $2 per bushel. The equilibrium quantity of wheat sold prior to the subsidy was equal to 200,000 bushels. Predict the new equilibrium quantity of wheat after the imposition of the subsidy given that the demand for wheat is known to be unit elastic
a. 100,000 bushels b. 200,000 bushels c. 250,000 bushels d. 400,000 bushels
A usury ceiling will be effective depending on
a. whether the usury rate is above 10 percent. b. whether the usury rate is above 8 percent. c. whether that rate is below what the equilibrium rate of interest would have been in a free market. d. how well organized the lending institutions are.
In order to change the money supply, the Fed might use which of the following tools?
A. Dual mandate B. Reserve requirement C. Deficit spending D. Fiscal policy