Jose's restaurant operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10 . In this situation,
a. Jose's restaurant is earning a positive economic profit.
b. Jose's restaurant should shut down immediately.
c. Jose's restaurant is losing money in the short run but should continue to operate.
d. the market price will rise in the short run to increase profits.
b
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Which of the following is true? i) A rational choice is made on the margin. ii) Microeconomics is the study of the national economy while macroeconomics is the study of the global economy. iii) Economists try to understand how the economic world works by testing normative statements.
A. Only ii B. i and ii C. Only iii D. i and iii E. Only i
An increase in the demand for labor means that
A) the demand for labor increases as a result of an increase in the real wage rate. B) the demand for labor increases at any real wage rate. C) the supply of labor must also be increasing. D) the demand for labor increases as a result of a decrease in the real wage rate.
To prevent demand-pull inflation,
A) firms must refuse to increase the money wage rate. B) firms must refuse to increase the real wage rate. C) the Fed must not let the quantity of money persistently rise. D) the natural unemployment rate must increase. E) real GDP must increase.
Compared with a monopolist, the demand curve faced by a monopolistically competitive firm is
A) more elastic. B) more inelastic. C) perfectly elastic. D) perfectly inelastic.