What is meant by long-run competitive equilibrium?
What will be an ideal response?
Long-run competitive equilibrium exists in an industry when price is equal to short-run marginal cost, short-run average cost, and long-run average cost. This implies that firms are earning zero profits.
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A general formula for the multiplier is
A) 1/(1-MPS) B) 1/(MPC) C) 1/(MPS) D) 1/(MPC-1)
A sign that the Federal Reserve is moving to lower interest rates would be
A) a reduction in bank reserves. B) an increase in margin requirements. C) a widening gap between the Treasury bill yield and the discount rate. D) a narrowing gap between the Treasury bill yield and the discount rate.
Which of the following is not a determinant of Investment spending?
A. Real income B. Interest rates C. Taxes D. Expected profitability
The demand curve for capital is
A. its entire marginal physical product curve. B. the downward-sloping portion of its marginal physical product curve. C. its entire marginal revenue product curve. D. the downward-sloping portion of its marginal revenue product curve.