Which of the following statements regarding a competitive firm is correct?
a. Because demand is downward sloping, if a firm increases its level of output, the firm will have to charge a lower price to sell the additional output.
b. If a firm raises its price, the firm may be able to increase its total revenue even though it will sell fewer units.
c. By lowering its price below the market price, the firm will benefit from selling more units at the lower price than it could have sold by charging the market price.
d. For all firms, average revenue equals the price of the good.
d
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If an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possibilities curve is:
A) bowed out from the origin. B) bowed in toward the origin. C) a straight line. D) a vertical line.
Suppose the required reserve ratio is 5%. If banks are conservative and choose not to loan all of their excess reserves, the actual money multiplier is
A) less than 20. B) greater than 20. C) equal to 20 D) equal to 5.