Refer to Figure 4-6. At the price P2, consumers are willing to buy the Q2 pounds of granola. Is this an economically efficient quantity?
A) Yes, otherwise consumers would not buy Q2 units.
B) Yes, because the price P2 shows what consumers are willing to pay for the product.
C) No, the marginal benefit of the last unit (Q2 ) exceeds the marginal cost of that last unit.
D) No, the marginal cost of the last unit (Q2 ) exceeds the marginal benefit of the last unit.
C
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If there is a financial panic and increased uncertainty about the returns in the stock market and bond market, what is the likely effect on money demand?
A) Money demand declines first, then rises when inflation increases. B) Money demand rises. C) The overall effect is ambiguous. D) Money demand declines.
In the short run, a perfectly competitive firm will maximize profit by producing where: a. MC = MR
b. MC = ATC. c. ATC = MR. d. AVC = MC.