A producer can raise profit by expanding output if his:
a. marginal revenue is equal to marginal cost.
b. marginal revenue is less than marginal cost.
c. marginal revenue is negative.
d. marginal cost is negative.
e. marginal revenue is greater than marginal cost.
e
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The Solow residual is a measure of
A) average labor productivity. B) average capital productivity. C) total factor productivity. D) the rate of growth of real GDP.
Assuming compact discs and cassettes are substitute goods, a decrease in the price of cassettes will cause the demand curve for compact discs to:
a. shift to the left as consumers switch from buying discs to cassettes. b. shift to the right as consumers switch from buying discs to cassettes. c. shift to the left as producers increase cassette production and reduce disc production. d. remain unchanged since discs and cassettes are sold in separate markets.
If at a given real interest rate desired national saving is $60 billion, domestic investment is $30 billion, and net capital outflow is $20 billion, then at that real interest rate in the loanable funds market there is a
a. surplus. The real interest rate will rise. b. surplus. The real interest rate will fall. c. shortage. The real interest rate will rise. d. shortage. The real interest rate will fall.
A competitive environment penalizes the inefficient use of resources. All but one of the following statements addresses why competition is so important for an efficient outcome. Which statement is not true?
a. Competition drives the price closer to the marginal cost of production. b. Consolidation leads to concentration of market power that allows providers to act like monopolists and price their products above marginal cost. c. Competition forces firms to improve efficiency or lose profits. d. More firms competing in a market means more substitutes, so consumers have more options, and their demand is less elastic.