A monopoly firm operates with declining average cost. If regulators impose marginal cost pricing, the market will
A. remain a monopoly but behave like a perfectly competitive industry.
B. become perfectly competitive.
C. be entered by additional firms but will not necessarily become perfectly competitive.
D. maximize consumer surplus.
Answer: D
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The price of a goods falls and you discover that you can eat more of the goods because they are cheaper than other goods
a. surplus efficiency. b. latent efficiency. c. demand efficiency. d. production efficiency. e. none of the above
Use the following graph to answer the next question. 
The economy is at equilibrium at point C, which is below potential output. What fiscal policy would increase real GDP?
A. Shift aggregate demand to the right by increasing government purchases. B. Shift aggregate demand to the right by increasing taxes. C. Shift aggregate demand to the left by decreasing government purchases. D. Shift aggregate demand to the left by decreasing taxes.
The buying and selling of foreign currency by the central bank is a trade policy whose objective is:
A. reducing purchases of assets abroad. B. stabilizing the exchange rate against external shocks. C. stabilizing the interest rate against foreign capital outflows. D. promoting long term economic growth.
Price discrimination works best when
A. Buyers have information about prices charged to different customers. B. Sellers cannot meet collectively. C. A product is purchased frequently by consumers. D. Buyers do not have perfect information about the price.