The behavior of the monopolistic firm
A. maximizes the benefits to consumers, given the resources available to the economy.
B. increases output in order to raise prices in the short term.
C. results in excess capacity and inefficiency.
D. results in entry into the market by other firms.
Answer: C
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Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.
Answer the following statement true (T) or false (F)
When households have very low savings ________
A) investment decreases B) they are less able to cope with severe economic downturns C) bankruptcies increase D) all of the above E) none of the above
Assume that a Tesla Model 3 sells for $30,000 in the United States and that the exchange rate is $1 = 0.8 euro. For purchasing power parity to hold, the same car in Europe should sell for
A. 36,250 euros. B. 37,500 euros. C. 24,000 euros. D. 30,000 euros.
A decrease in the reserve ratio will
A. cause the money supply to decrease. B. not affect the money supply. C. cause the money supply to increase. D. decrease the money multiplier.