Assume a firm is operating under conditions of pure competition and faces a marginal cost function that is everywhere below its average total cost
If the firm is producing where marginal revenue equals marginal cost will it be possible for it to make an economic profit? Explain.
Since the firm is producing where marginal revenue equal marginal cost and marginal cost is below the average total cost then the firm will not be able to make an economic profit. The reason is that marginal revenue is equal to price under conditions of pure competition. Since the firm is producing where marginal revenue equal marginal cost that means that the price is also below the average total cost.
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Suppose the overall MPC is 0.75 and the marginal propensity to import is 0.25. A $4 billion increase in U.S. exports will lead to a ________ increase in GDP
A) $6 billion B) $8 billion C) $12 billion D) $16 billion
When a country's export spending exceeds import spending, the country is experiencing a:
A) trade deficit. B) trade surplus. C) budget deficit. D) none of the above.