Figure 6.2 shows the cost structure of a firm in a perfectly competitive market. Suppose the current market price is $10 and the firm produces the profit-maximizing output level. If the firm's total fixed cost increases due to a new government regulation, the short-run response of the firm should be to:(Note: since the question does not restrict the firm's response to the short run, we can't rule out that the rise in fixed cost will push the firm below the breakeven point and that the firm will exit the industry in the long run,
thus decreasing its current output level.)
A. produce its current output level.
B. increase its current output level.
C. decrease its current output level.
D. There isn't sufficient information.
Answer: A
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If people accurately speculate that a run on one bank will result in a run on all banks, the financial system would experience what is known as a
A) financial death spiral. B) clearinghouse collapse. C) bank panic. D) commodity crisis.
Holding other things constant, decreases in the price level in the US will
a. Cause the dollar to appreciate b. Cause the dollar to depreciate c. Cause no change in dollar value d. None of the above
As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see
a. an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor. b. an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor. c. a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor. d. a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
The unemployment rate is the:
A. number of workers in the labor force. B. number of workers unemployed. C. percentage of the labor force that is out of work. D. percentage of the population that is out of work.