In the standard model of pure competition, a profit-maximizing firm will produce the output quantity in the short run where the gap between:
A. Marginal revenue and marginal cost is the largest, with revenue higher than cost
B. Average revenue and average cost is the largest, with revenue higher than cost
C. Total revenue and total cost is the largest, with revenue higher than cost
D. Average revenue and average variable cost is the largest
C. Total revenue and total cost is the largest, with revenue higher than cost
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In the simple deposit expansion model, an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed
A) sold $1,000 in government bonds. B) sold $100 in government bonds. C) purchased $1000 in government bonds. D) purchased $100 in government bonds.
Customers are usually more willing to pay more for the first unit of a good they purchase than for the second, third, or subsequent units. This implies that
A) typical consumers are irrational. B) firms are using non-linear price discrimination. C) firms are unable to determine their customers' reservation prices. D) typical consumers have a downward sloping demand curve.