A firm is earning an economic profit. In the short run the firm should ________. In the long run the firm should probably ________.
A. produce where MC = MR; expand
B. shut down; exit the industry
C. produce where MC = MR; leave the industry
D. shut down; expand
Answer: A
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With respect to labor supply, the income effect leads a person to want to work more in order to raise his or her income
Indicate whether the statement is true or false
In the LM curve, the __________ the interest-sensitivity of liquidity preference, the __________ the necessary increase in the rate of interest to restore equilibrium
A) greater; smaller B) greater; greater C) smaller; smaller D) None of the above.
In a competitive labor market, the change in total labor costs divided by the change in labor is always equal to:
a. one. b. the wage rate. c. the number of firms in the market. d. the change in total revenue. e. the competitive market price of the output.
If a percentage decrease in money supply is followed by a proportional percentage decrease in prices and output, this means that:
a. the velocity of money is constant. b. the economy is in a recession. c. the velocity of money has fallen. d. real GDP is constant. e. the economy is not at maximum capacity