For a firm in a perfectly competitive market, if it is producing at a level of output where marginal costs are equal to marginal revenue it:
A. should cut back production to increase profits.
B. should increase production to increase profits.
C. is producing a profit-maximizing quantity.
D. is impossible to tell how quantity should be changed without more information.
C. is producing a profit-maximizing quantity.
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Refer to Figure 14-2. If the government delays Gigacom's entry and Xenophone moves first, what is the likely outcome in the market?
A) Xenophone offers internet service via cable line and earns a profit of $4 million while Gigacom offers DSL internet service and earns a profit of $4.5 million. B) Both offer internet service via cable line; Xenophone earns a profit of $6 million and Gigacom earns a profit of $9 million. C) Both offer DSL internet service; Xenophone earns a profit of $8 million and Gigacom earns a profit of $7 million. D) Xenophone offers DSL internet service and earns a profit of $5 million while Gigacom offer internet service via cable line and earns a profit of $6.5 million.
A bank with excess reserves
A) cannot make new loans. B) must make new loans. C) may choose to make new loans equal to the amount of excess reserves. D) can lend an amount equal to the amount of excess reserves multiplied by the inverse of the required reserve ratio.