If market price is greater than or equal to the minimum of AVC but below the minimum of AC, then
A) the firm will shut down.
B) the firm will operate because its loss is less than if it shut down.
C) revenue is lower than variable costs.
D) profit is positive and so the firm will operate.
B
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Decreases in the price level will
A) raise consumption because real wealth increases. B) lower consumption because goods and services are less affordable. C) raise consumption because goods and services are more affordable. D) lower consumption because real wealth decreases.
In the classical model, fiscal policy has no demand-side effects on output or employment
a. True b. False
Just before Valentine's Day, the price of roses increases dramatically. This is because
a. self-interested individuals try to charge more for a good than consumers are willing to pay. b. demand increases while the supply of roses remains relatively constant. c. the supply curve of roses is highly elastic. d. the demand for roses is relatively inelastic most of the year, but becomes more elastic as demand increases.
Sometimes On Time (SOT) Airlines is considering buying a new jet. SOT would be more likely to buy a new jet if there were either
a. a decrease in the price of a new jet or a decrease in the interest rate. b. a decrease in the price of a new jet or an increase in the interest rate. c. an increase in the price of a new jet or a decrease in the interest rate. d. an increase in the price of a new jet or an increase in the interest rate.