Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:
A. should shut down.
B. should continue to produce since total revenue exceeds total variable cost.
C. is earning a positive economic profit.
D. can increase profit by increasing output.
Answer: A
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If average labor productivity increases, real GDP per person:
A. increases. B. decreases. C. may increase or decrease depending on the change in the share of population employed. D. remains constant.
The simple multiplier formula assumes the following, except that
A. the economy has excess capacity and room to expand output. B. firms will raise prices as buyers buy more of their output. C. business firms will increase production if demand for their output increases. D. people will spend more if they earn additional income.
If the economy is in an equilibrium with real GDP less than potential GDP, a fiscal stimulus could move the economy toward potential GDP by simultaneously ________ taxes and ________ government expenditures on goods and services
A) raising; increasing B) raising; decreasing C) cutting; increasing D) cutting; decreasing E) raising; not changing
The unionization rate of public sector workers is about:
A. 10.3%. B. 17.1%. C. 24.4%. D. 34.4%.