Many economists believe that in our modern economy, firm size is most directly determined by
a. concentration ratios that decrease as the number of firms decreases
b. diseconomies of scale that make it less costly to increase firm size
c. easy entry of new firms when there are economies of scale
d. government policies that dictate optimal firm investment levels
e. modern technology that gives an advantage to large-scale production methods
E
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Borrowers and lenders make transactions based on the
A) expected real interest rate less the expected rate of inflation. B) real interest rate. C) expected real interest rate. D) expected nominal interest rate.
If it does not shut down, a perfectly competitive firm produces where marginal cost is equal to the marginal revenue
A) only in the short run. B) only in the long run. C) always to maximize its profit. D) only if it is not possible to produce where price equals average variable cost. E) only if it is not possible to produce where price is greater than average total cost.