If a firm is currently producing where MR = MC and price = $24, AVC = $22, and ATC = $26, then in the long run this firm should
a. continue to operate at a loss
b. earn a positive profit
c. go out of business
d. increase output
e. decrease price
C
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According to the Fisher effect, if a lender and a borrower would agree on an interest rate of 8 percent when no inflation is expected, they should set a rate of _______ when an inflation rate of 3 percent is expected
a. 2 percent b. 5 percent c. 8 percent d. 11 percent
Suppose that the firm's only variable input is labor. When 50 workers are used, the average product of labor is 50 and the marginal product of labor is 75. The wage rate is $80 and the total cost of the fixed input is $500. What is average total cost?
A. $1.80 B. $0.825 C. $0.63 D. $4.10 E. none of the above
The estimated demand for a good is
= 4800 - 16P - 0.65M - 1.5PRwhere Q is the quantity demanded of the good, P is the price of the good, M is income, and PR is the price of related good R. The coefficient on P
A. is negative as dictated by the law of demand. B. violates the law of demand. C. should not be greater than one (in absolute value). D. should have the same sign as the coefficient on PR. E. both c and d
Use our model of the bond market (supply and demand) to explain what happens if the U.S. economy continues to grow at robust rates.
What will be an ideal response?