Refer to the above diagram showing the average total cost curve for a perfectly competitive firm. Suppose that average variable cost is $8 at 40 units of output. At that level of output, total fixed cost:
A. is $2.
B. is $40.
C. is $80.
D. cannot be determined from the information provided.
Answer: C. is $80.
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A unit of output whose production and sale adds less to cost than it generates in additional revenue is
A) a profitable unit to produce and sell if marginal cost declines with additional output. B) a profitable unit to produce and sell if total receipts exceed total costs. C) a profitable unit to produce and sell unless it must be sold at a price below average unit cost. D) a profitable unit to produce and sell.
Which of the following is not true of the demand deposit multiplier?
a. Its formula is 1/RRR. b. It represents the change in demand deposits generated by a change in reserves. c. It represents the change in demand deposits generated by a change in taxes. d. It is a way to determine the effect on money supply from a given Federal Reserve action. e. It ignores changes in the behavior of the public and the banks.
In the short run, an increase in net exports causes
A. an increase in real GDP and the price level. B. an increase in real GDP and a decrease in the price level. C. adecrease in real GDP and an increase in the price level. D. a decrease in real GDP and the price level.
An increase in the U.S. money supply would cause the value of the dollar to ________ and U.S. net exports to ________ in the short run using a Keynesian model.
A. fall; rise B. fall; fall C. rise; fall D. rise; rise