The figure above shows the demand and cost curves for a single-price monopoly. What economic profit does this firm make?

As a firm attempts to increase its production, its long-run average costs eventually rise because of

A) the law of diminishing returns. B) diseconomies of scale. C) fixed capital. D) insufficient demand.

The president wishes not only to increase spending for education by $4 billion but also to maintain a balanced budget. Therefore, taxes will also be increased by $4 billion. What will happen to GDP?

A. It will increase. B. It will remain the same. C. It will decrease. D. It’s impossible to know without the multiplier.