In a perfectly competitive market
A. demand facing the industry is perfectly elastic.
B. a firm must lower price to attract more customers.
C. the additional revenue from selling one more unit of output is less than price.
D. all of the above
E. none of the above
Answer: E
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Explain how the currency drain ratio affects the size of the money multiplier. In your explanation, suppose that in one round of the money creation process a bank gains $1 million in new deposits and reserves
Further suppose that the desired reserve ratio is 10 percent and the currency drain ratio is 50 percent.
In 2006, the base price of a Hummer SUV was about $30,000. By 2008 as gasoline prices increased,
A) the demand curve for Hummers shifted leftward and Hummer prices decreased. B) the demand curve for Hummers shifted rightward and Hummer prices increased. C) there was a movement down along the Hummer demand curve. D) there was a movement up along the Hummer supply curve.
To conduct open market operations, the FOMC issues a directive to
A) the trading desk at the Federal Reserve Bank of New York. B) the Board of Governors in Washington, D.C. C) the presidents of the district banks. D) the chairman of the New York Stock Exchange.
Why is the monopoly total welfare lower than the competitive total welfare?
What will be an ideal response?