The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output.
B. government policy.
C. decreasing inflation only.
D. increasing or decreasing inflation.
Answer: D
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Refer to the scenario above. Which of the following will be true if Alice stops the auction at $30,000?
A) She will earn zero consumer surplus. B) She will earn a consumer surplus of $5,000. C) She will earn a consumer surplus of $30,000. D) She will earn a consumer surplus of $16,000.
For economists, conducting experiments is often difficult and sometimes impossible
a. True b. False Indicate whether the statement is true or false
A profit-maximizing firm should hire an input as long as the
A. marginal revenue product of the input is at least as much as the cost of hiring the input. B. marginal revenue product of the input is greater than the marginal revenue product of other inputs the firm is using. C. price of the input doesn't exceed the price of the other inputs used in the firm's production. D. firm can increase its total revenue.
A monopolist finds the output (Q*) rate that maximizes profit. It finds the price by
A) taking the height of the marginal revenue curve at output rate Q. B) taking the height of the marginal cost curve at output rate Q. C) taking the height of the demand curve at output rate Q. D) setting price equal to marginal cost.