The figure above shows the demand and cost curves for a single-price monopoly. Which of the following statements is FALSE?
A) To maximize its profit, the firm will set marginal revenue equal to zero by producing 12.5 units.
B) The firm will make an economic profit.
C) The firm is a not a natural monopoly.
D) The firm will set price where demand is elastic.
A
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Gretchen expects the price level to rise from 104 this year to 108 next year, and she is able to incorporate these expectations into her wage contract. If the price level rises to 106 next year instead of 108, which of the following will occur?
A) Gretchen's real wage may rise or fall, depending on the unemployment rate. B) Gretchen's real wage will rise. C) Gretchen's real wage will fall. D) Gretchen's real wage will be unchanged.
What is meant by saying that economics is an empirical science?
A) Economic theories will be tested by seeing how well they correspond to people's declared preferences. B) Economic theories cannot be tested because there is no means of measuring economic variables with adequate precision. C) Economic theories cannot be tested because economic variables change too quickly. D) Economic theories will be tested by seeing how well they correspond to real-world phenomena.