Exhibit 9-1 A monopolistic competitive firm
?
As represented in Exhibit 9-1, the maximum long-run economic profit earned by this monopolistic competitive firm is:
A. zero.
B. $200 per day.
C. $1,000 per day.
D. $20,000 per day.
Answer: A
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The Sherman Antitrust Act of 1890
(a) did not specify what economic actions are legal. (b) said that only competitive economic actions were legal. (c) declared illegal every combination in restraint of trade. (d) declared none of the above.
A table which shows the quantities of a particular good or service that producers are willing to sell (supply) at various prices is known as a supply:
A. schedule. B. figure. C. curve. D. graph.
Discuss why a budget deficit results in a different real interest rate under the Ricardo-Barro effect than under the crowding-out effect
What will be an ideal response?
Stock analysts often argue that lower interest rates are good for the stock market. Does this argument make sense?
a. No; lower interest rates will tend to slow down the economy and this will be bad for the stock market. b. Yes; the lower rates of interest will increase the value of future income (and capital gains) and stock prices will rise to reflect this factor. c. No; the lower rates of interest will reduce the value of future income (and capital gains) and this will cause stock prices to fall. d. Yes; the lower interest rates will cause inflation and inflation is generally good for the stock market.