If the short-run equilibrium position for a monopolistically competitive firm is P = $28.47, ATC = $22.13, and MC = MR = $17.47, which of the following statements is true?
a. The firm's economic profit is $11.
b. Additional firms will be attracted into the industry.
c. The firm could raise price and increase profit.
d. The firm could lower price and increase profit.
e. The firm is producing on the upward-sloping segment of its ATC curve.
B
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Recall the Application. The rise in commodity prices corresponded with ________ in interest rates, and this change in interest rates would result in bond prices ________
A) a decrease; falling B) an increase; falling C) an increase; rising D) a decrease; rising
Refer to the scenario above. What is the quantity effect of the price change?
A) $1,400 B) $2,700 C) $5,400 D) $6,750
Business cycles will occur if either of the two theories below characterizes the behavior of the economy:
A) the classical or the Keynesian theories of aggregate demand. B) the classical or the real balance theory. C) deflation impotence or rigid nominal wages. D) A and C.
Refer to the figure below. If the supply curve for labor can be written as L = w/2 - 3/2 and the initial wage was $10, how much excess burden is created if there is a tax on wages of $2?
