Category: Economics

➤ Why does profit rise when price is greater than marginal cost?
Profit rises because each extra unit sold adds more revenue than its additional cost. In perfect competition marginal revenue equals price, so when P>MC, marginal profit is positive. The firm earns higher total profit by producing until P=MC, after which extra units no longer increase profit.

James Buchanan is the father of what sub-field in economics?
A.Supply and Demand
B.Cost Theory
C.Macroeconomics
D.Public Choice

➤ Is lowering the reserve ratio the same as expansionary monetary policy, and what alternatives exist?
Yes. Lowering the reserve ratio is an expansionary monetary policy tool that raises money supply by increasing bank lending. Alternative tools include open market purchases, lowering policy interest rates, quantitative easing, and forward guidance. Each tool differs in speed, precision, and scope, so central banks choose combinations depending on inflation, growth targets, and financial stability concerns.

22 the threshold effect encourages economic growth and increases in capital wealth demonstrates the effect of moving toward

Marketing what is the key benefit of a free trade agreement? It reduces removes tariffs and quotas between member countries.

➤ How does frictional unemployment differ from structural and cyclical unemployment?
Frictional unemployment is short and caused by job search, while structural unemployment stems from lasting skill or location mismatches. Cyclical unemployment rises during recessions due to weak demand. Policymakers use different tools: job matching and information services for frictional, retraining or mobility programs for structural, and fiscal/monetary stimulus for cyclical.