Refer to the graph. Economic output in year 0 is $20 billion. What is potential output in year 1?
A. $20.4 billion
B. $21.2 billion
C. $20.8 billion
D. $20 billion
Answer: A
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A decrease in the price level causes a lower equilibrium quantity demanded.
Answer the following statement true (T) or false (F)
If a monopolistically competitive firm is earning profits in the short run:
A. it is acting like a perfectly competitive firm. B. other firms have an incentive to enter the market. C. barriers to entry will allow the firm to enjoy them in the long run as well. D. it should leave the industry before it gets competed away.
You operate a shop that repairs TVs and VCRs. The going wage rate in a competitive market for skilled repair people is $18 per hour. Given the current demand for your services, the marginal revenue product of your repair people is $28 per hour. You should
A. increase the number of repair people working for you. B. decrease the number of repair people working for you. C. make no change in the number of people you use. D. lay off all your employees and do all the work yourself.
When we add private benefits and external benefits together, the result is called:
A. public costs. B. network benefits. C. production benefits. D. social benefits.