Marginal Revenue is
A) the increase in total revenue from selling one more unit of output.
B) equal to P(1 + 1/e).
C) equal to P when the price elasticity of demand is infinite.
D) All of the above.
D
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Consumers and firms are known as price takers only if
A) no market exists to determine the equilibrium price. B) they can set the market price. C) they cannot unilaterally affect the market price. D) excess demand exists.
The reserve ratio is 20 percent. The Fed buys $1 million in government securities from a bond dealer by transmitting the funds to the dealer's deposit account at Bank A Bank A loans the maximum amount possible to a construction company, which buys materials from a lumber yard. The lumberyard deposits the construction company's check in Bank B. What is the maximum loan Bank A can now make and the maximum loan Bank B can now make?
A) Bank A: 0; Bank B: $640,000 B) Bank A: 0; Bank B: $800,000 C) Bank A: $800,000; Bank B: $640,000 D) Bank A: $800,000; Bank B: 0