If a profit-maximizing competitive firm ________ compensate society for a negative externality, the firm will choose to produce where price equals marginal cost.
A. voluntarily chooses to
B. is legally bound to
C. is pressured to
D. does not have to
Answer: D
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If the federal funds rate is below the equilibrium federal funds rate, then the supply of reserves would be __________ than the demand for reserves and the banks would try to __________ reserves causing the federal funds rate to fall
A) greater than; lend B) greater than; borrow C) less than; lend D) less than; borrow
Author A accepts a $5,000 advance and a 10% royalty after 5,000 books are sold. Author B foregoes the advance and negotiates for a 15% royalty on all books sold. Author C decides to self publish his book and keep 50% of all sales revenue
Which of these authors expects to sell the fewest books? A) Author A B) Author B C) Author C D) They are all equally likely.
If the own price elasticity of demand is infinite in absolute value, then:
A. consumers do not respond at all to changes in price. B. demand is perfectly elastic. C. the demand curve is vertical. D. the demand curve is vertical and consumers do not respond at all to changes in price.
Sunk costs:
a. are not considered in marginal analysis. b. help to determine the optimal quantity of an activity. c. can dramatically increase marginal costs. d. are the same as variable costs.