Suppose that Figure 7.4 shows an industry's market demand, its marginal revenue, and the production costs of a representative firm. If the industry was perfectly competitive, a representative firm would charge a price of:
A. $35.
B. $25.
C. $20.
D. $16.
Answer: B
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Higher efficiency in the economy can be reached if prices are held low by law
a. True b. False Indicate whether the statement is true or false
If fixed costs equal $120, variable costs equal $800, and output is 10, average variable cost equals:
A. $ 80. B. $120. C. $ 92. D. $ 40.
If firms are producing below capacity,
a) it is not possible to increase output b) they will charge higher prices to maintain profit levels c) resources, especially labor, are in short supply d) output can be expanded by hiring extra workers e) an increase in aggregate demand will force firms into bankruptcy
Demand-pull inflation occurs
A. when the aggregate demand curve shifts to the right, while aggregate supply remains stable. B. when the aggregate demand curve shifts to the left, while aggregate supply remains stable. C. when the aggregate supply curve shifts to the right, while aggregate demand remains stable. D. when the aggregate supply curve shifts to the left, while aggregate demand remains stable.