Refer to the table shown. If the market price is $8, a perfectly competitive profit-maximizing firm will produce:QuantityMarginal Cost1$3253749
A. 1 unit of output.
B. 2 units of output.
C. 3 units of output.
D. 4 units of output.
Answer: C
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The Ricardo-Barro effect argues that the crowding-out effect
A) is the result of the government budget deficit and higher interest rates. B) will occur, because the private saving supply will change to offset any change in the government budget deficit. C) is stronger when the government runs a budget surplus than when it runs a budget deficit. D) is the result of a government budget surplus and higher interest rates. E) will not occur, because the private saving supply will change to offset any change in the government budget deficit.
To determine how much of a good to produce to achieve allocative efficiency, we
A) construct a production possibilities frontier and choose the midpoint. B) construct a production possibilities frontier and choose any point on it. C) must produce on the PPF and at the point where the marginal benefit and marginal cost of the good are equal. D) must produce on the PPF and at the point where the marginal benefit exceeds by any amount the marginal cost of the good. E) must produce on the PPF and at the point where the marginal benefit exceeds by as much as possible the marginal cost of the good.
An article in the Wall Street Journal reports that “most cable TV operators are aware that cable is price sensitive, and there comes a point where people won’t pay the price.” Which demand curve in Figure 6-6 best illustrates this situation?
A. 1 B. 2 C. 3 D. 4
When MR a. Demand is flat
b. Demand is upright
c. Demand is elastic
d. Demand is inelastic