A firm should always continue to operate at a loss in the short run if:
A. the owner enjoys helping her customers.
B. the firm cannot produce any other products more profitably.
C. it can cover its variable costs and some of its fixed costs.
D. the firm will show a profit.
Answer: C
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In the simple circular flow model, the funds received by a carmaker when it sells a car goes to
A) only the owners of the carmaker. B) the owners of all of the resources used to make the car. C) the workers who helped build the car. D) the owners of firms who sold materials to the carmaker, and the rest stays with the firm.
If the government wishes to increase GDP by $1,000b, and the MPC is 0.6, it should increase its spending by:
A. $250b. B. $400b. C. $600b. D. $1,000b.
When the interest rate rises, people are:
A. less likely to save, that is, purchase a financial asset. B. more likely to save, that is, sell a financial asset. C. more likely to save, that is, purchase a financial asset. D. less likely to save, that is, sell a financial asset.
Which of the following is true of standard economic analysis?
A. It characterizes a firm as a black box that transforms inputs to outputs. B. It applies basic economic tools to examine the effects of managerial decisions. C. It focuses on the internal architecture of a firm. D. It characterizes a firm as an organization that generates economic growth.