Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC = $700; AVC = $500; MC = $600; MR = $600. The firm should
A) increase output.
B) decrease output.
C) continue to produce its current output.
D) shut down.
Answer: C
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Opportunity cost is defined as the
A) total value of all the alternatives given up B) highest-valued alternative given up C) cost of not doing all of the things you would like to do. D) lowest-valued alternative given up
When a government has a budget surplus, the surplus
A) helps finance investment. B) crowds-out private saving. C) must be subtracted from private saving to get total saving. D) increases the world real interest rate.
By studying the effects of choice architecture, we can:
A. expand the simplifying assumption that people always make the choices that are best for themselves. B. blend the ideas of psychology with core economic beliefs. C. open the possibility that we can no longer tell if someone is making a mistake or choosing something that is maximizing his utility. D. All of these statements are true.
According to the quantity theory of money, increasing the money supply:
A. leads to inflation. B. causes production to increase. C. leads to decreased spending. D. causes each dollar to be spent less often.