Which of the following statements is correct?
a. In the long run, both perfectly competitive firms and monopolistically competitive firms operate with excess capacity.
b. A firm operates with excess capacity when, in the long run, its level of output is below the efficient scale.
c. For any firm, efficient scale is the level of output at which the average-total-cost curve is tangent to the demand curve.
d. All of the above are correct.
b
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According to the interest rate effect, an increase in the price level causes people to:
a) increase their money holdings, which increases interest rates and decreases investment spending. b) decrease their money holdings, which increases interest rates and decreases investment spending. c) to increases their money holdings, which decreases interest rates and decreases investment spending. d) to decrease their money holdings, which decreases interest rates and increases investment spending.
Assuming your local cash price is quoted above the CBOT futures price, an increase in transportation costs in your area would be expected to have what effect on the basis:
A. Widen the basis. B. Strengthen the basis. C. No effect on the basis. D. Not enough information to tell.
Refer to the above figure. The top two arrows of the figure refer to the product markets. The bottom arrows refer to the factor markets. Which arrow represents the final consumer goods and services?
A) Arrow A B) Arrow B C) Arrow C D) Arrow D
Which central bank has its exchange rate as a focus of its monetary policy?
A) Bank of Canada B) Bank of England C) European Central Bank D) Federal Reserve