Every time the Fed buys or sells on the open market, the __________ changes
A) budget deficit
B) income tax rate
C) money supply
D) a and b
E) a, b, and c
C
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A firm in monopolistic competition makes its decisions on quantity and price by
A) taking price as given from the market and producing where MR = MC. B) taking both price and quantity as given from the market. C) producing where MR = MC and setting the price for this quantity from the demand curve. D) taking quantity as given from the market and setting the price for this quantity from the demand curve. E) producing where MR = MC and setting the price so that P = MR = MC.
The main problem with a regulatory commission setting P = ATC is that the regulated firm will
a. experience a loss b. find its demand curve shifting to the left c. earn economic profits d. refuse to make new purchases of capital e. have little incentive to keep costs down