In the long-run, profit maximizing monopolists
A. never make positive economic profits.
B. price where MC and price are equal.
C. will produce where MC is below long run ATC.
D. produce where average total costs are minimized.
Answer: C
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Refer to Table 16-1. Consider the hypothetical information in the table above for potential real GDP, real GDP, and the price level in 2016 and in 2017 if Congress and the president do not use fiscal policy
If Congress and the president want to keep real GDP at its potential level in 2017, they should A) decrease government purchases. B) decrease income taxes. C) increase the level of interest rates. D) decrease the money supply.
Answer the following statements true (T) or false (F)
1. Derived demand for a resource stems from the demand for the good or service it produces. 2. The MRP is the additional revenue obtained by producing one more unit of output. 3. In perfect product competition, the output price is fixed to the firm. 4. MRP declines because MP declines. 5. Firms hire workers up to the point where MRP = the wage rate.
The term "crowding out" refers to the phenomenon that occurs when increased government spending
A) raises the price level and reduces consumption. B) leads to higher interest rates which reduces private investments. C) leads to higher bond prices which decreases the demand for Treasury bonds. D) leads to increased budget deficits that ultimately warrant increases in income taxes.
Joe walks into Best Buy prepared to spend no more than $500 cash on a new computer, but the price turns out to be $600. Joe is told if he finances it on a Best Buy credit card, it will cost $600, but he will get a $25 gift card free with the computer. Joe opts to open the credit card and puts the full $600 on the account. According to economic theory, Joe's decision is:
A. irrational. B. rational. C. budget-conscious. D. optimal.