In perfect competition, a profit-maximizing business will expand until its marginal cost equals the market price.
Answer the following statement true (T) or false (F)
True
In perfect competition, a profit-maximizing business will expand until its marginal cost equals the market price. This is because in perfect competition, the marginal revenue equals the market price, and profit maximization tells a business to produce until its marginal revenue equals its marginal cost.
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Figure 11-1
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In Figure 11-1, to reach the level of potential GDP, the administration of President Obama would most likely advocate
A. increasing Social Security payments. B. decreasing defense spending. C. decreasing personal income taxes. D. All of the above are correct.
The U.S. aggregate demand curve shifts leftward if
A) the economic conditions in Europe improve so that European incomes increase. B) there is a tax cut. C) the Federal Reserve increases the interest rate. D) the exchange rate falls.
The price elasticity of new automobile purchases is about 1.2. This implies that an increase of $1,000 on a $10,000 automobile will
A. reduce the number of autos sold by approximately 1.2 percent. B. increase the consumer expenditures on autos by approximately 1.2 percent. C. reduce the number of autos sold by approximately 12 percent. D. increase consumer expenditures on autos by approximately 12 percent.
The Solo Coal Mine is the only employer in the small town of Way out there. The market supply of coal miners is Qs = 0.02W - 200, where W is the annual wage of a coal miner and Q is the number of people who would accept employment as a coal miner. What is the coal mine's marginal expenditure when it hires 150 coal miners?
A. $17,500 B. $30,500 C. $10,000 D. $25,000