All other things being equal, a business making shirts would choose not to expand when
a) marginal revenue per shirt equals $7, and marginal cost per shirt equals $10.
b) marginal revenue per shirt equals $20, and marginal cost per shirt equals $10.
c) marginal revenue per shirt equals $11, and marginal cost per shirt equals $10.
Ans: a) marginal revenue per shirt equals $7, and marginal cost per shirt equals $10.
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A point lying inside (under) a production possibilities frontier indicates that
A. the economy is saving money. B. there are no associated opportunity costs. C. more output could be produced with existing resources. D. technology limits production.
According to the Lucas critique, if past increases in the short-term interest rate have always been temporary, then
A) the term-structure relationship using past data will then show only a weak effect of changes in the short-term interest rate on the long-term rate. B) the term-structure relationship using past data will show no effect of changes in the short-term interest rate on the long-term rate. C) one cannot predict the term-structure relationship as it depends on expectations. D) the term-structure relationship using past data will nevertheless show a strong effect of changes in the short-term interest rate on the long-term rate because of a change in the way expectations are formed.
Fiscal policy is government action to influence aggregate demand and in turn to influence the level of real GDP and the price level, through:
a. expanding and contracting the money supply. b. regulation of net exports. c. changes in government spending and/or tax revenues. d. encouraging businesses to invest.
If you know what marginal cost is, then you should know what marginal revenue is. It's the change in
a. total profit generated by a change in quantity b. price generated by a change in quantity c. total revenue generated by a change in quantity d. output generated by a $1 change in price e. average revenue generated by a change in quantity