A rational decision maker compares the expected marginal cost to the expected marginal benefit of any activity

If a person withdraws $500 from his/her checking account and holds it as currency, then M1 will ________ and M2 will ________

A) not change; increase B) not change; not change C) decrease; increase D) increase; decrease E) decrease: decrease

If, at the point where MR = MC, the firm incurs losses, in the short run the firm should:

a. shut down. b. increase output. c. decrease output. d. continue at its current output if P > AVC. e. continue at its current output if P > ATC.