If a profit-maximizing firm finds that price exceeds average variable cost and marginal cost is greater than marginal revenue, it should:
a. reduce output, but continue producing in the short run.
b. increase output.
c. shut down.
d. not alter its production level since it is earning a profit.
Question 2
Assume that any given percentage of the population earns an equal percentage of real GDP. This percentage of population will be represented by:
a. a point below the line of income equality.
b. a line lying below the line of income equality.
c. a point on the line of income equality.
d. a line lying above the line of income equality.
e. a point above the line of income equality.
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