Which of the following is not possible when a firm is maximizing its profits?
a. MC = MR
b. AVC is at its minimum point
c. AFC < AVC
d. MC = MR and MC is decreasing
e. MC = MR and MC is increasing
D
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Going from a closed to an open economy ________ macroeconomic policymaking, especially now that exchange rates are ________
A) complicates, flexible B) complicates, fixed C) simplifies, flexible D) simplifies, fixed
Mary is a waitress who, when tips are included, earns $15 per hour. Mary chooses to work 40 hours per week. Assume there are no taxes, so Mary earns $600 per week. A slowdown in the restaurant's business cuts Mary's hourly wage in half, to $7.50 per hour. To compensate Mary for the lost income, Mary's rich parents begin sending a gift of $300 per week.
(i) Design an indifference curve-budget line diagram illustrating this situation. (ii) Does Mary now choose to work more or fewer hours? Does Mary's consumption rise, fall, or remain unchanged? Is Mary now better off or worse off?
If a production function has constant returns to scale, output can be doubled if
a. labor alone doubles. b. all inputs but labor double. c. all of the inputs double. d. None of the above is correct.
A perfectly competitive industry achieves allocative efficiency in the long run. What does allocative efficiency mean?
A) Firms use an input combination that minimizes cost and maximizes output. B) Each firm produces up to the point where all scale economies are exhausted. C) Each firm produces up to the point where the price of the good equals the marginal cost of producing the last unit. D) Production occurs at the lowest average total cost.