If P = MC and MC > ATC, then a perfectly competitive firm will earn ______ profits.
A) positive
B) zero
C) negative
D) breakeven
A) positive
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Which of the following is not a problem for the price system allocating resources among different time periods?
A. Interest rates are used for a variety of purposes other than influencing investment. B. The market devotes too much to immediate consumption. C. Our market system leads to lesser real incomes for later generations. D. Our market system despoils irreplaceable natural resources.
A characteristic of monopolistic competition is that each firm
A) faces perfectly elastic demand. B) faces a downward-sloping demand curve. C) has a perfectly elastic supply. D) has a perfectly inelastic supply.
If there is a decrease in the expected future profitability of capital,
A) the aggregate demand curve will shift right. B) the aggregate demand curve will shift left. C) the aggregate demand curve will become steeper. D) the aggregate demand curve will be unaffected.
The shape of the aggregate demand curve does not tell us anything about how the total dollar value of spending will ultimately be divided between output and prices. For this we need
A) information about the standard of living in the country. B) information that only the Consumers' Price Index can provide. C) an aggregate supply curve. D) to know how far from the origin the aggregate demand curve is.