For a competitive firm, if at least some portion of its short-run average cost curve lies below the price of the product, we can conclude that the firm
A. is earning a profit at the profit maximizing output level.
B. is incurring short-run losses.
C. is earning zero economic profits.
D. is going to shut down.
Answer: A
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________ typically lead to increases in ________
A) decreases in interest rates; investment B) increases in disposable income; consumption C) increases in autonomous investment; investment D) all of the above E) none of the above
A monopolist faces the inverse demand curve P = 60 - Q. It has variable costs of Q2 so that its marginal costs are 2Q, and it has fixed costs of 30. The monopoly's maximum profit is
A) 220. B) 370. C) 420. D) 510.
In the figure above, in order to promote an efficient allocation of resources, the government could impose a tax equal to
A) zero. B) $250 per unit. C) $150 per unit. D) $100 per unit.
If a bank has $10 million of checkable deposits, a required reserve ratio of 10 percent, and it holds $2 million in reserves, then it will not have enough reserves to support a deposit outflow of
A) $1.2 million. B) $1.1 million. C) $1 million. D) $900,000.