Under rate-of-return regulation, average cost pricing
A) is inflated so the firm can make economic profits.
B) includes variable costs but not a cost for capital.
C) includes what they consider to be a fair rate of return on investment.
D) includes a cost for capital that generates an above normal rate of return.
Answer: C
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If a monopolist's price is $50 at the output where marginal revenue equals marginal cost and average total cost is $43, then the incremental profit from the last unit sold is $7
Indicate whether the statement is true or false
When there is full employment, there is no _____ unemployment.
A. frictional B. structural C. cyclical
A shock that could trigger an expansion is a
a. large increase in oil prices b. financial crisis c. sudden cutback in military spending d. large decrease in oil prices e. sudden increase in the interest rate
The concept of a government spending multiplier refers to
A) how much government spending increases whenever GDP increases B) how much GDP increases whenever government spending increases C) how much the money supply multiplies for a given increase in the monetary base D) how much GDP increases for a reduction in the Fed Funds target rate