Perfectly competitive firms must make all of the following decisions except
A. what price to charge for their output.
B. how much of each input to demand.
C. how much output to supply.
D. which production technology to use.
Answer: A
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If a monopolist has no marginal costs and only recurring fixed costs, then, if he produces, any quantity that he produces is profit maximizing if the price elasticity of market demand is -1.
Answer the following statement true (T) or false (F)
A monopoly is a market with one
a. seller, and that seller is a price taker. b. seller, and that seller sets the price. c. buyer, and that buyer is a price taker. d. buyer, and that buyer sets the price.
An initial increase in investment spending will generate:
a. More of an increase in income than the initial increase because of the multiplier effect b. Less of an increase in income than the initial increase because of the multiplier effec c. Less of an increase in income than the initial increase because of the net export effect d. More of an increase in income than the initial increase because of the net export effect
If the MPC is .6, and investment spending falls by $50 billion, GDP will fall by $___ billion.
A. 30 B. 50 C. 100 D. 125