A competitive firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:
A. marginal cost.
B. average total cost.
C. average variable cost.
D. average fixed cost.
Answer: A
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Suppose the economy is in equilibrium when there is a change in environmental policy that bans all pesticides and herbicides on farmland. We would expect to observe
A) a decrease in aggregate supply and an increase in aggregate demand. B) a decrease in both real output and the natural rate of unemployment. C) a decrease in real output and an increase in the natural rate of unemployment. D) a decrease in real output and an increase in the price level.
It may be advisable for a firm to stay in business, even if it's losing money,
a. but only in the short run b. but only if its profit covers the loss c. but only in the long run d. because "things may change" e. when the owner has lots of money
The logic of collective action explains the persistence of tariffs and quotas as an outcome that is driven by the asymmetry between
A. the benefits distributed across many consumers versus the concentration o f the costs in the hands of a few firms. B. the benefits distributed across many firms versus the concentration of the costs in the hands o f a few consumers. C . the benefit s concentrated in the hands of the few consumers, versus the costs distributed across many firms. D. the benefits concentrated in the hands o f the few firms, versus the costs distributed across many consumers.
Which of the following is most likely to increase the potential output of an economy?
What will be an ideal response?