If there is no output for which product price is sufficient to cover variable costs
A) the firm should stay open in the short-run.
B) the firm should shut down in the short run.
C) the firm earns economic profits by staying open.
D) the firm should increase production.
B
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A firm chooses its profit-maximizing quantity of capital by
A) examining the total cost of capital equipment. B) comparing the price of capital with the price of labor. C) comparing the marginal revenue product of capital with the rental price of capital. D) determining the rate at which the firm can borrow funds to purchase plant and equipment.
To correct the budget deficit for inflation, we should
a. multiply the budget deficit by the price deflator for GDP. b. subtract interest payments from tax revenues. c. divide the budget deficit by nominal GDP. d. divide the budget deficit by the consumer price index.