In the above figure, if the firm is producing Q1 units at a price P1, the firm should
A) increase output and decrease price.
B) decrease output and increase price.
C) not change output or price.
D) shut down.
A
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Someone who owns stock in a drug company that suddenly and unexpectedly reveals it has found an effective vaccine against AIDS will make a profit on the stock
A) at once. B) only if she hangs on to the stock for a number of years. C) only if she sells the stock. D) only when the dividends actually start to increase. E) when total revenue exceeds all costs, including research and development costs.
Which of these changes is observed in an economy when a recessionary gap is closed in the long run?
a. An increase in the inflation rate and a decrease in the unemployment rate b. An increase in the level of output and a decrease in the price level c. An increase in both the rate of output and the price level d. A decrease in both the rate of output and the price level e. A decrease in the inflation rate and an increase in the unemployment rate