By shutting down when price is less than average variable cost at the profit-maximizing level of output, a perfectly competitive firm will limit its losses to its:
A) total variable costs.
B) total costs.
C) total fixed costs.
D) marginal costs.
C
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If a firm increases its capital stock, real wages will likely ________ and the equilibrium quantity of labor will likely ________
A) decrease; decrease B) increase; increase C) decrease; increase D) increase; decrease
What would happen to the equilibrium price and quantity of peanut butter if the price of peanuts went up, the price of jelly fell, fewer firms decided to produce peanut butter, and health officials announced that eating peanut butter was good for you?
a. Price will fall, and the effect on quantity is ambiguous. b. Price will rise, and the effect on quantity is ambiguous. c. Quantity will fall, and the effect on price is ambiguous. d. Quantity will rise, and the effect on price is ambiguous.
A set of combinations of nominal interest rates and GDP, for which the demand for money is equal to the supply of money, is the:
A) IS curve. B) aggregate expenditure line. C) supply curve. D) LM curve.
The economy’s self-correcting mechanism refers to the way money wages react to either a recessionary gap or an inflationary gap.
Answer the following statement true (T) or false (F)