What does the dotted line between C and D represent?
a. excess production
b. excess consumption
c. aggregate expenditure
d. aggregate production
a. excess production
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Other things equal, if planned investment spending is greater than actual investment spending, then aggregate expenditure will be ________ real GDP and inventories will ________
A) greater than; rise B) greater than; fall C) less than; rise D) less than; fall
Specialization can occur because
A. governments pass laws that require it. B. varying skills differentiate workers. C. managers and laborers share job tasks. D. absolute advantage creates specialization among laborers.
Consider a monopolist who charges a single price to all of its customers. If this monopolist starts price discriminating, its output will ________ and its profit will ________.
A. rise; fall B. rise; rise C. fall; rise D. fall; fall
Consider a perfectly competitive firm for which MC equals ATC at the $10 level, and MC equals AVC at the $8 level. If the market price is $7,
a. the firm can earn an economic profit. b. the firm will suffer an economic loss but should operate in the short run. c. the best the firm can do is to break even. d. the firm should shut down in the short run.