If the Federal Reserve System lowers the legal reserve requirement, it forces banks to hold repaid loans as required reserves instead of lending them again, thus shrinking the money supply

If AC < p where MR = MC

A) firms earn positive profits and new firms will enter. B) firms earn negative profits and existing firms will leave. C) firms earn zero profits and new firms will not enter and no existing firms will leave. D) None of the above.

If a perfectly competitive firm can sell each unit of output for $9, and the marginal cost of the last unit produced is $8.50, then the:

A. firm should lower its output level in order to increase profits. B. extra benefit of the last unit produced is less than the extra cost. C. firm is earning an average profit of $0.50. D. extra benefit of the last unit produced is greater than the extra cost.