Suppose That P × Y Is $5,000 Million a Year

question 224

Multiple Choice

Suppose that P × Y is $5,000 million a year and the quantity of money is $500 million.Then the velocity of circulation is

• A) 50.
• B) 500.
• C) 10.
• D) 20.
• E) 2,500,000.

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Definitions:

MR = MC Rule

An economic principle stating that profit maximization for a firm occurs when its marginal revenue (MR) equals its marginal cost (MC).

Purely Competitive Seller

A seller in a perfectly competitive market where the product offered has no differentiation, and the seller is a price taker with no control over the market price.

MR = MC Output

The condition where Marginal Revenue (MR) equals Marginal Cost (MC) represents the profit-maximizing level of output for a firm.

Total Variable Costs

The sum of all costs that vary with output level in the short term.