Suppose that a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25 . Average cost is minimized at Q = 35, where average cost is $50 . Which of the following is true?
a. This firm charges $50 for the good.
b. This firm charges more than $50 for the good.
c. This firm charges less than $50 for the good.
d. The firm has excess capacity at all output levels greater than 35 units.
e. Average cost is $50 at the profit-maximizing output level.
B
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A horizontal line has a slope of
A. one. B. zero. C. infinity. D. undefined.
One reason many people make their own pickles rather than buy them is that
a. they can maintain control over the quality during production b. the total cost of ingredients is the same as the price of store-bought pickles c. firms do not make high-quality pickles d. people place a high value on their time e. firms do not produce goods that can be made at home
Assume that the expectation of declining housing prices cause households to reduce their demand for new houses and the financing that accompanies it. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and real GDP in the context of the Three-Sector-Model?
a. The real risk-free interest rate falls, and real GDP rises. b. The real risk-free interest rate and real GDP remain the same. c. The real risk-free interest rate rises, and real GDP falls. d. The real risk-free interest rate falls, and real GDP remains the same. e. The real risk-free interest rate falls, and real GDP falls.
The quantity theory of money of the Classical economists says that a change in the money supply will produce a:
A. proportional change in the price level. B. greater than proportional change in the price level. C. less than proportional change in the price level. D. wide variation in the velocity of money.