The only way to get people to make risky investments is to offer ______________.
Fill in the blank(s) with the appropriate word(s).
high profit prospects
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Reserves decrease if the Federal Reserve
a. raises the discount rate or auctions more credit. b. raises the discount rate but not if it auctions more credit. c. lowers the discount rate or auctions more credit. d. lowers the discount rate but not if it auctions more credit.
The owner of Tie-Dyed T-shirts, a perfectly competitive firm, hires you to give him economic advice. He tells you that the market price for his shirts is $15 and that he is currently producing 200 shirts at an AVC of $10 and an ATC of $20. You tell him he should continue to operate in the short run because
A. he is earning an economic profit of $4,000. B. In fact you do not tell him to operate-he should shut down since he has a loss. C. his loss from operating in only $2,000 which is less than his loss if he shuts down. D. he has to pay this fixed costs of $2,000 if he shuts down which is greater than his loss when he operates.