A firm in a competitive industry faces the following short-run cost and revenue conditions: ATC = $16; AVC = $8; and MR = MC = $12. This firm should
A) expand production and keep price constant.
B) decrease production and raise its price.
C) shut down.
D) continue to operate at the same price and output level in the short run.
Answer: D
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Chandler (1994) maintains that domestic labor productivity has a tendency to dip with
(a) a decrease in the variety and number of new goods and services. (b) flat consumer demand. (c) increased foreign competition. (d) all of the above.
Estimation by WLS
A) although harder than OLS, will always produce a smaller variance. B) does not mean that you should use homoskedasticity-only standard errors on the transformed equation. C) requires quite a bit of knowledge about the conditional variance function. D) makes it very hard to interpret the coefficients, since the data is now weighted and not any longer in its original form.
Which of the following is a responsibility of Congress?
A. Monetary, fiscal, and supply-side policy. B. Monetary policy. C. Monetary and fiscal policy. D. Fiscal policy and supply-side policy.
Which of the following best describes how a perfectly competitive industry would respond to a sudden increase in popularity of the product? The market demand curve would shift to the right, leading to:
A. a higher equilibrium price in the short run and a permanent increase in economic profit. B. a lower short-run equilibrium price due to the entry of firms into the market. C. a higher equilibrium price in the short run and entry into the market in the long run. D. no change in the short-run equilibrium price, and a higher long-run equilibrium quantity.