A price-setting firm faces the following estimated demand and average variable cost functions:Qd = 800,000 - 2,000P + 0.7M + 4,000PRAVC = 500 - 0.03Q + 0.000001Q2where Qd is the quantity demanded, P is price, M is income, and PR is the price of a related good. The firm expects income to be $40,000 and PR to be $53. Total fixed cost is $2,600,000. What is the profit-maximizing choice of output?
A. 20,000 units
B. 12,000 units
C. 10,000 units
D. 8,000 units
E. 0 units, the firm shuts down
Answer: A
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The economy is considered to be at full employment when
A) the frictional unemployment rate is zero. B) the structural unemployment rate is zero. C) the cyclical unemployment rate is zero. D) the unemployment rate is zero.
Persons who do not work because of bad weather or vacation are part of
a. the unemployed labor force. b. the employed labor force. c. frictional unemployment. d. cyclical unemployment.
All other things unchanged, a higher exchange rate
A. reduces net exports and aggregate demand B. reduces net exports and increases aggregate demand C. increases net exports and aggregate demand D. increases net exports and reduces aggregate demand
A decrease in demand will have what effect on equilibrium price and quantity?
A. Price will increase; quantity will decrease. B. Price will decrease; quantity will increase. C. Both price and quantity will increase. D. Both price and quantity will decrease.