A competitive firm
a. is a price maker, whereas a monopolist is a price taker.
b. and a monopolist are price makers.
c. and a monopolist are price takers.
d. is a price taker, whereas a monopolist is a price maker.
Answer: c. and a monopolist are price takers.
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The Clinton Administration, faced with eight years of uninterrupted prosperity was chronically worried about inflation and thought of applying countercyclical fiscal policy but was nervous about doing so because
a. it was politically incorrect to raise taxes b. it was politically incorrect to cut government spending c. countercyclical policy had never worked before d. it didn't know where the economy would be in six months and was afraid that the countercyclical policy they would introduce would be an inappropriate one e. there was no administrative lag that it can use to implement the policy
What is the short-run break-even price? What are economic profits at this price? Why would a firm be willing to operate permanently at this price?
What will be an ideal response?