The shutdown rule for a firm in a perfectly competitive industry is that the firm should cease production if
A) P < MC.
B) P < ATC.
C) P < AVC.
D) P < AFC.
C
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Believers in a fixed-rule approach to stabilization policy propose that
A. Congress should balance the high employment budget. B. the Fed should keep the money supply growth constant. C. the economy be stabilized by automatic mechanisms. D. All of these responses are correct.
Refer to the given figure where the nominal interest rate equals 6 percent and the money supply equals 600.
If the Federal Reserve wants to set the nominal interest rate at 4 percent, it must conduct open market ________ to set the money supply at ________.
A. purchases; 800 B. purchases; 200 C. sales; 200 D. sales; 800
Implicit cost is the opportunity cost of the inputs that do not require monetary payment.
Answer the following statement true (T) or false (F)
Which of the following statements about a market for used cars is INCORRECT?
A. The presence of low-quality cars decreases consumers' willingness to pay. B. An increase in price increases the quantity of high-quality cars supplied. C. An increase in price decreases the quantity of low-quality cars supplied. D. The decrease in the quantity of high-quality cars lowers consumers' willingness to pay.