Answer the following statement true (T) or false (F)
1) In maximizing profit, a firm will always produce that output where total revenues are at a
maximum.
2) In the short run, a competitive firm will always choose to shut down if product price is less than
the lowest attainable average total cost.
3) A competitive firm will produce in the short run so long as its price exceeds its average fixed
cost.
4) The short-run supply curve slopes upward because producers must be compensated for rising
marginal costs.
1) F
2) F
3) F
4) T
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If the world price for good A is below the domestic price for good A without trade, then consumer surplus will ________ and producer surplus will ________ with trade.
A. decrease; decrease B. increase; decrease C. increase; increase D. decrease; increase
The money wage rate has little effect on the supply curve. It mainly affects the aggregate demand curve
a. True b. False Indicate whether the statement is true or false
The demand for microwaves in a certain country is given by: D = 8,000 - 30P, where P is the price of a microwave. Supply by domestic microwave producers is: S = 4,000 + 10P. If this economy opens to trade while the world price of a microwave is $50, and the government imposes a tariff of $30 per microwave, then the domestic quantity demanded will be ________ microwaves.
A. 5,600 B. 5,000 C. 4,500 D. 4,000
Keynes argued that the downward slope of the demand for money curve depends on the:
A. equation of exchange. B. rate of interest. C. federal funds rate. D. discount rate.