A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will:
A. Increase total revenue, increase total cost, and decrease profit
B. Decrease total revenue, increase total cost, and decrease profit
C. Increase total revenue, decrease total cost, and decrease profit
D. Decrease total revenue, total cost, and profit
B. Decrease total revenue, increase total cost, and decrease profit
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What is the equation of exchange? How can the equation of exchange be converted into the quantity theory of money?
What will be an ideal response?
In the above figure, if the economy is initially at an equilibrium output at point A and the interest rate is r1, then an open market purchase of bonds by the Fed will
A) not have any impact on short- or long-run equilibrium real Gross Domestic Product (GDP). B) cause interest rates to decline to r2, investment to decline, and aggregate demand to shift inward to the left. C) cause interest rates to increase and output to decline. D) cause interest rates to decline to r2, investment to increase to I2, and the AD curve to shift upward to the right.