In the short run with predetermined prices, when output is less than planned aggregate expenditure, firms will:

The relationship between real GDP and potential GDP over the business cycle can be best summarized by which of the following statements?

A) Real GDP fluctuates around potential GDP. B) Real GDP is always equal to potential GDP. C) Real GDP cannot be greater than potential GDP. D) Real GDP cannot be less than potential GDP. E) Real GDP cannot be equal to potential GDP.

Answer the following questions true (T) or false (F)

1. If in the long run a firm makes zero economic profit, it should exit the industry. 2. A perfectly competitive firm in a constant-cost industry produces 1,000 units of a good at a total cost of $50,000. If the prevailing market price is $48, the number of firms and the industry's output will decrease in the long run. 3. Suppose there are economies of scale in the production of a specialized memory chip that is used in manufacturing microwaves. This suggests that the microwave industry is a decreasing-cost industry.