Suppose that when a firm produces the level of output at which price equals marginal cost, the firm's total revenue is less than its variable cost. In this case, the firm should:
A. purchase more fixed factors of production.
B. shut down.
C. produce more so that its total revenue increases.
D. not change its level of output even if it's earning an economic loss in the short run.
Answer: B
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The fact that a monopoly has to take the shapes of marginal cost AND marginal revenue into account when making decisions is reflected in the fact that
A) monopolies don't have a supply curve. B) monopolies don't have a demand curve. C) monopolies have the same supply curve as perfectly competitive firms. D) monopolies maximize profit.
The Keynesian-cross model is based on the idea that the ____ must equal total output
a. components of consumption b. components of aggregate supply c. components of aggregate demand d. net exports
The quantity of goods exchanged in a market will be below the equilibrium quantity
a. when the price is either held above or below the equilibrium price. b. only when the price is held above the equilibrium price. c. only when the price is held below the equilibrium price. d. only when the price is rising.
If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay
a. variable cost but not fixed cost b. no costs at all c. variable cost and fixed cost d. only variable cost e. only fixed cost