Refer to the Following Figure

question 70

Multiple Choice

Refer to the following figure:

The graph shows demand and marginal cost for a perfectly competitive firm.
-If the firm is producing 300 units of output, decreasing output by one unit would ______ the firm's profit by $______.

• A) decrease, $2
• B) increase, $2
• C) increase, $3
• D) decrease, $5
• E) increase, $5

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Definitions:

AAA Corporate Bonds

The highest quality bonds issued by corporations with a strong ability to repay the debt, making them low-risk investments.

Interest Rates

The amount charged by lenders to borrowers for the use of money, expressed as a percentage of the principal, typically on an annual basis.

Pure Expectations Hypothesis

A theory that suggests that the interest rates on long-term bonds will equal an average of current and future short-term interest rates.

Yield Curve

A graphical representation showing the relationship between the interest rates on debts of different maturities, typically of government bonds, highlighting investors' expectations for future interest rates and economic conditions.