Under monopoly, a firm:
a. is a price taker.
b. maximizes profit by setting marginal cost equal to marginal revenue.
c. will shut down in the short-run if price falls short of average total cost.
d. always earns a pure economic profit.
b
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Refer to Figure 15-12. In the dynamic AD-AS model, the economy is at point A in year 1 and is expected to go to point B in year 2, and the Federal Reserve pursues policy. This will result in
A) potential real GDP levels lower than what would occur if no policy had been pursued. B) inflation rates higher than what would occur if no policy had been pursued. C) real GDP levels higher than what would occur if no policy had been pursued. D) unemployment rates higher than what would occur if no policy had been pursued.
Explain what an asset bubble is, when an asset bubble would form, and why the bubble will eventually burst
What will be an ideal response?