Corrective taxes enhance efficiency, but the cost to administer them exceeds the revenue they raise for the government

A country's government plans a $2 billion increase in government purchases in hopes of increasing real GDP in the economy by $40 billion. The plan would work if the MPS for this economy is

A. 0.1. B. 0.2. C. 0.05. D. 0.25.

Suppose Tim's Cowboy boot factory produces in a perfectly competitive market. Suppose the average total cost of cowboy boots is $65, the average variable cost of cowboy boots is $60, and the price of cowboy boots is $62. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:

A. should shut down. B. should continue to produce since total revenue exceeds total variable cost. C. is earning a positive economic profit. D. can increase profit by increasing output.