A monopolistically competitive firm maximizes profits when it
A) produces the quantity at which marginal cost equals the market price.
B) produces the quantity at which marginal cost equals marginal revenue and uses the demand curve to determine the market price.
C) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal cost.
D) produces the quantity at which marginal cost equals marginal revenue and sets the price equal to the marginal revenue.
B
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Compared to commercial banks and thrift institutions, finance companies are
A) heavily regulated. B) able to attract small depositors. C) prevented from making relatively small loans. D) virtually unregulated.
Suppose the nominal interest rate is 4 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 5 percent. At the end of the year, you have earned:
A. a nominal increase in your savings of $40. B. an increase in your purchasing power. C. a real rate of return of 1 percent. D. All of these statements are true.
In Figure 5.8, if the supply curve moves from S2 to S5,
,
A. the firm will go from making an economic profit to a loss but one that is not big enough to make it want to shutdown. B. the firm will make a smaller economic profit than they used to. C. the firm will go from making an economic profit to a normal profit. D. the firm will go from making an economic profit to a loss that is big enough to make it want to shutdown.
Describe the differences between capitalism and socialism.
What will be an ideal response?