What is the "Hotelling rule" for a monopolist?
A) Price minus marginal cost must rise at exactly the rate of interest.
B) Price plus marginal cost must rise at exactly the rate of interest.
C) Marginal revenue minus marginal cost must rise at exactly the rate of interest.
D) Marginal revenue and marginal cost must be independent of the rate of interest.
C
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Suppose households decide to reduce savings because they want to enjoy more present time than future time. In this case, the loanable funds model predicts that
A) interest rate goes down, and quantity of borrowed funds increases. B) interest rate goes down, and quantity of borrowed funds decreases. C) interest rate goes up, and quantity of borrowed funds decreases. D) interest rate goes up, and quantity of borrowed funds increases.
Based on this graph, which of the following is the best reason for the firm to shut down?
a. The AVC curve is completely above P.
b. The ATC curve is completely above P.
c. The MC curve is mostly above P.
d. The MR curve is equal to P.