In a free market, a firm's rate of output is determined
a. where marginal social cost equals marginal social benefit
b. where marginal private benefit equals marginal social benefit
c. where marginal social cost equals marginal private cost
d. where marginal private cost equals marginal private benefit
e. by government
D
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All of the following are characteristics of an oligopoly EXCEPT
A) diseconomies of scale over all ranges of output. B) small number of firms. C) high barriers to entry. D) interdependence.
According to the Taylor rule, when real GDP is equal to potential GDP, and the inflation rate is equal to its target rate of two percent, the Federal funds rate should be:
A. 2 percent and this implies a real interest rate of 0 percent B. 2 percent and this implies a real interest rate of 4 percent C. 4 percent and this implies a real interest rate of 2 percent D. 4 percent and this implies a real interest rate of 4 percent