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If a firm is producing where its SMC = price and the LMC is less that LAC, then it would do better in the long run by
a. increasing output with its existing plant until LMC equals price.
b. increasing plant size until LMC and SMC are identical and equal to price.
c. decreasing plant size until LAC, SAC, and price are equal.
d. doing nothing because it is already at the long-run profit maximizing point
When the Federal Chairman, Ben Bernake, announces a change in the interest rate, does the Federal Reserve directly or indirectly change interest rate? explain.
Debt issued by Southeastern Corporation currently yields 12%. A municipal bond of equal risk currently yields 8%. At what marginal tax rate would an investor be indifferent between these two bonds?
Derive the Aggregate Demand (AD) curve graphically, the experiment is to change Y in i-Y space and see what happens to P.
If the power of special interest were reduced for example, through the adoption of supra-majority voting rule, would economic efficiency improve? How would contributions to political campaigns be affected? Do you think politicians are very interested..
Explain why does the burden of sales tax fall completely on consumer when the price elasticity of demand is perfectly inelastic; the seller when perfectly elastic. and the prefect inelastic supply and perfectly elastic supply.
Production Possibilities Tables for Germany and Canada (note that we are assuming that opportunity costs remain constant along the production possibilities frontier), and that each country produces only these two products).
Sam arrived on campus at the beginning of the academic year with $480 to spend on textbooks and CDs. The price of a textbook is uniformly $80 and the price of a CD is always $20. Her parents made a deal with her - after Sam spends $240 of her own ..
Illustrate what do economist mean by this. How do they determine what the right amount of the good is.
In 2005, The economist reported that France's real exchange rate had increased relative to Germany's real exchange rate during the preceding two years. How can this be true if both France and Germany used the euro as their currency.
Howard Bowen is a big cotton farmer. The land and equipment he has a current market value of $4,000,000. Bowen owes his local bank $3,000,000.
It is given an offer to split, if you accept this offer you keep the $1, and the other player keeps $19.
If firms suddenly become more optimistic about the profitability of investment and planned investment spending rises by $100 billion, while consumers become more pessimistic and autonomous consumer spending falls by $100 billion, what happens to ag..
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