If a firm's demand curve is perfectly elastic, then at the profit-maximizing level of output
A. P > 0 and MR = 0.
B. P < MR < MC.
C. P > MR > MC.
D. P = MR = MC.
Answer: D
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If a nation experiences weather disasters, such as tsunamis and droughts, then its:
a. Average price level and real GDP should remain constant until there is a change in Aggregate Demand. b. Average price level and real GDP should fall. c. Average price level and real GDP should rise. d. Average price level should fall, and real GDP should rise. e. Average price level should rise, and real GDP should fall.
On this graph, the use of a subsidy leads to a deadweight loss appearing primarily ______ the original equilibrium point.
a. above b. below c. to the right of d. to the left of
The loss of the profit motive by a publicly owned natural monopoly could:
A. increase the incentive to lower costs. B. increase the motivation to improve efficiency. C. increase the incentive to provide better service. D. reduce the motivation to improve efficiency.
"Dividing the economic pie more equally may reduce the size of the economic pie." This argument is characterized as:
a. untrue. b. a form of discrimination. c. a conflict between equity and efficiency. d. a conflict between full employment and economic growth. e. b and c.