The shutdown rule for a firm in a perfectly competitive industry is that the firm should cease production if
A) P < MC.
B) P < ATC.
C) P < AVC.
D) P < AFC.
Answer: C
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Consider the market for consumer loans. A legal ceiling set below the market-clearing interest rate would tend to
A) increase the quantity demanded for loans. B) decrease the quantity supplied of loans. C) create a shortage of loans. D) do all of the above. E) do none of the above.
Using the data in the above table, suppose imports equal $250 billion and investment equals $1,000 billion. Hence government expenditure equals
A) $1,000 billion. B) $750 billion. C) $500 billion. D) $250 billion.
Workfare requires able-bodied individuals to participate in work-related activities in order to receive transfer payments.
A. True B. False C. Uncertain
Which of the following would lead to a positive supply shock?
a. An increase in the money supply. b. A decrease in taxes. c. The discovery of a more efficient production method. d. An increase in consumer confidence. e. An increase in energy prices.