A perfectly competitive firm faces a market clearing price of $150 per unit. Average total costs are at the minimum value of $200 per unit at an output rate of 100 units
Average variable costs are at the minimum value of $100 per unit at an output rate of 50 units. Marginal cost equals $150 per unit at an output rate of 75 units. It can be concluded that the short-run profit-maximizing output rate is A) 75 units, at which the firm earns zero economic profits per unit sold.
B) 75 units, at which the firm earns negative economic profits per unit sold.
C) 75 units, at which the firm earns positive economic profits per unit sold.
D) 50 units, because price is less than average variable costs.
B
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The effect throughout the entire economy of one firm’s increase in spending will be
A. less than the recipient’s income. B. equal to the recipient’s income. C. greater than the recipient’s spending. D. offset by another individual’s saving.
According to the interest rate effect, a decrease in the price level will
A) decrease the real value of money balances, which causes total planned real expenditures to increase. B) cause interest rates to fall, which generates an increase in borrowing, so that total planned real expenditures increase. C) lead to a decrease in net exports, which causes total planned real expenditures to decrease. D) increase the real value of money balances, which causes interest rates to increase, thereby reducing total planned expenditures.
The historical rise in living standards of American workers is primarily a result of
a. the influence of labor unions in America. b. tariff protection imposed by the American government. c. the enactment of minimum-wage laws in America. d. the rise in American productivity.
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
A. people substitute between goods. B. things produced by people under 18 are not counted. C. quality has remained steady. D. the underground economy (unreported and illegal income and sales) is not counted.