Figure 10-5
In Figure 10-5, which graph best illustrates the situation of an economy reacting to a recessionary gap by reducing resource cost levels?
A. (1)
B. (2)
C. (3)
D. (4)
Answer: A
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The opportunity to exploit economies of scale is one of the gains to be derived by removing tariffs and other trade distortions. These gains will be the result of a decrease in
A) world prices of imports. B) the consumption distortion loss triangle. C) the production distortion loss triangle. D) international labor mobility. E) excessive entry and inefficient business practices.
If countries that imported goods and services from the United States went into recession, we would expect that U.S. net exports would
a. rise, making aggregate demand shift right. b. rise, making aggregate demand shift left. c. fall, making aggregate demand shift right. d. fall, making aggregate demand shift left.
Which of the following statements is true regarding profit-maximizing markup for a Cournot oligopoly with N identical firms?
A. P[NEM/(1 + NEM)] = MC B. P[N(1 + EM)/NEM] = MC C. P = [NEM/(1 + NEM)]MC D. P = [(1 + NEM)/NEM]MC
A monopolistically competitive firm is producing 50 units of output in the short run where marginal cost is $3.00, average total costs are $5.00, price is $4.50, average variable cost is $4.00, and marginal revenue is $3.00. How much profit is the firm
making? What output recommendation would you make for the firm? What will be an ideal response?