Refer to the graphs shown, which depict a perfectly competitive market and firm. If market demand decreases from D0 to D1, the firm will:
A. earn negative economic profit in the short run.
B. earn positive economic profit in the short run.
C. earn positive economic profit in the long run.
D. raise the price it charges.
Answer: A
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Planned investment spending, a component of aggregate demand, is equal to
A) fixed investment plus actual inventory investment. B) fixed investment plus unplanned inventory investment. C) fixed investment. D) fixed investment plus planned inventory investment.
In a long-run perfectly competitive equilibrium
A) P = MR = MC > ATC. B) P = MR > MC = ATC. C) P = MR = MC = ATC. D) P > MR > MC = ATC.
A pollution tax has the effect of reducing the costs of production for a firm, leading to a rightward shift of the supply curve
a. True b. False Indicate whether the statement is true or false
The level of output at which marginal revenue equals zero is also the level of output at which a. total revenue is zero
b. profit is maximized. c. total revenue is maximized. d. total revenue is declining.