Assume a perfectly competitive firm is producing a level of output at which MR? < MC. What should the firm do to maximize its? profits?
A) The firm should do nothing — it wants to maximize the difference between MR and MC in order to maximize its profits.
B) The firm should decrease output.
C) The firm should increase price.
D) The firm should increase output.
Ans: B) The firm should decrease output.
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In the long run, a country will experience an increasing standard of living only if it experiences
A) a high rate of consumption. B) a slow rate of population growth. C) continuous technological change. D) a high rate of labor force growth.
Gross Domestic Product (GDP) is defined as the market value of:
A) all goods and services sold during the year by domestic and foreign producers. B) all final consumer goods produced during the year by domestic and foreign suppliers. C) all intermediate goods produced during the year by domestic and foreign suppliers. D) all final goods and services produced within the boundaries of an economy during the year by domestic and foreign-supplied resources.
One possible solution to improve performance of regulated firms is which of the following?
a. Allow the firm to set its own rate of return. b. Allow higher rates of return to cover higher cost of better performance. c. Allow a higher rate of return for better performance. d. Set lower prices when efficiency improves.
On an aggregate level, free trade produces a net __________ and restricted trade produces a net __________
A) loss; loss also B) benefit; benefit also C) benefit; loss D) loss; benefit