A perfectly competitive firm faces a horizontal demand curve because it is
A. a large firm in a small industry.
B. one of few firms in the market.
C. a price taker.
D. a price maker.
Answer: C
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GDP excludes most nonmarket transactions. Therefore, GDP tends to ________.
A. underestimate the rate of inflation in the economy B. overestimate the rate of inflation in the economy C. underestimate the amount of production in the economy D. overestimate the amount of production of the economy
A natural monopoly
A) faces more competition after regulation. B) might exaggerate its costs if it is regulated using rate of return regulation. C) might falsely minimize its costs if it is regulated using rate of return regulation. D) might falsely minimize its costs if it is regulated using a marginal cost pricing rule. E) is allowed to maximize its profit under a marginal cost pricing rule.
In the early 1950s, economist William Baumol demonstrated that a lower interest rate ________ the demand for money in a model without bond speculation ________ a "broker's fee" for conversions between money and bonds
A) raises, and without B) raises, but with C) lowers, and without D) lowers, but with E) does not affect, and without
A decrease in the marginal revenue product of land will: a. decrease the supply of land
b. increase the rental earnings from land. c. increase the price of land. d. decrease the demand for land.