In the short run, the profit-maximizing firm will ______
A. break even if marginal revenue equals marginal cost
B. make an economic profit if marginal cost is less than average total cost
C. incur an economic loss if average fixed cost exceeds marginal revenue
D. incur an economic loss if average total cost exceeds marginal revenue
D The firm's marginal revenue equals its price, so answer D is correct because in the case described by answer D, the firm's average total cost exceeds its price.
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What makes it extremely difficult for cartels to function effectively without government assistance?
A) Cartel members cannot agree among themselves on the optimum price because all have different costs. B) High prices encourage cartel members to offer discounts, and they attract new entrants to the industry. C) Marginal cost will not equal marginal revenue except at output levels beyond the cartel's capacity. D) Public interest considerations usually require an output greater than the cartel's net revenue maximizing output. E) The hostility of the public to price exploitation makes it difficult for the cartel to defend itself against the consequences of popular hostility.
To promote an economic expansion and an exit from the deflationary environment that the Japanese had been experiencing for the past fifteen years, the "Abenomics" aims at
A) increasing inflation target. B) increasing inflation expectations. C) purchasing long-term bonds. D) all of the above. E) none of the above.