The MC = MR approach to profit maximization means that a firm should produce until
a. marginal revenue equals zero
b. additional profit equals zero
c. marginal cost becomes negative
d. marginal revenue equals price
e. price equals average total cost
B
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Suppose the money market, drawn with the value of money on the vertical axis, is in equilibrium. If the money supply increases, then at the old value of money there is an
a. excess demand for money that will result in an increase in spending. b. excess demand for money that will result in a decrease in spending. c. excess supply of money that will result in an increase in spending. d. excess supply of money that will result in a decrease in spending.
When the price of the product falls
A. consumer’s surplus remains the same. B. producers’ surplus increases. C. consumer’s surplus falls. D. producer’s surplus falls.