Answer the following statements true (T) or false (F)
1) Refer to the diagram. If this represents a typical firm in the industry and the firm is producing at the profit-maximizing level of output in the short run, then in the long run we would expect more firms to enter the market.
2) Refer to the diagram. If this represents a typical firm in the industry and the firm is producing at the profit-maximizing level of output in the short run, then in the long run we would expect economic profits in this market to rise.
3)Refer to the diagram. If this firm is producing at the profit-maximizing level of output in the short run, then it is achieving productive and allocative efficiency.
2) F
3) F
4) T
5) F
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If the economy is in an inflationary boom, the Fed would most likely
a. encourage banks to provide loans by buying government securities. b. encourage banks to provide loans by raising the discount rate. c. encourage banks to provide loans by selling government securities. d. restrict bank lending by selling government securities. e. restrict bank lending by lowering the federal funds rate.
If international trade is based on product differentiation, for a country the basis for
A. importing is that the price of the imports is the same as the price of the domestic products. B. exporting is the domestic production of unique models or varieties demanded by some consumers in foreign markets. C. exporting is that domestic producers can charge a much higher price in the international market. D. importing is that foreign firms usually enjoy external scale economies.